The Centre has approved a Rs 5,000 crore lifeline for India’s aviation sector under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, stepping in as airlines grapple with mounting financial stress triggered by the West Asia crisis.
The move comes amid a sharp surge in aviation turbine fuel (ATF) prices, currency volatility and airspace restrictions in the wake of the Iran war, all of which have significantly raised operating costs and disrupted international routes. The strain has already begun to show, with Air India announcing a trimming of its international operations for June and July, citing certain routes as financially “unviable”.
According to the Ministry of Civil Aviation, the scheme is designed to provide targeted credit support and immediate liquidity relief. Each eligible airline can avail loans of up to Rs 1,000 crore, with an additional Rs 500 crore linked to an equivalent equity infusion.
The loans will have a tenure of up to seven years, including a two-year moratorium on repayments—offering breathing space to carriers struggling with cash flow pressures.
The government said the scheme also allows up to 50 per cent of the interest to be converted into a Funded Interest Term Loan (FITL), further easing repayment burdens in the short term and improving liquidity.
Civil Aviation Minister Ram Mohan Naidu said the decision reflects the Centre’s intent to support airlines through a challenging global environment.
06/05/2026 India Today
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