Indian Government Approves INR50 Billion Credit Support for Airlines

Indian Airlines to Receive Emergency Credit Support Amid Operational Pressure

The Indian government has approved emergency credit support of up to INR50 billion (USD528.9 million) for domestic airlines under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. The revised support package is higher than the previously discussed INR40 billion plan and comes as airlines continue to face financial pressure linked to the ongoing Middle East conflict.

According to a statement issued by the Ministry of Civil Aviation on 6 May 2026, the Union Cabinet cleared the scheme after Indian carriers reported rising aviation turbine fuel costs, restricted airspace access, lower aircraft utilisation, reduced international operations and growing liquidity concerns.

Under the scheme, the government will provide a 90 per cent credit guarantee cover on loans extended to eligible airlines. Financial assistance will be capped at INR15 billion (USD158.7 million) per borrower. This includes a maximum loan limit of INR10 billion (USD105.8 million), along with an additional INR5 billion (USD52.9 million) linked to equivalent equity infusion.

The loans will be available for a period of up to seven years and include a repayment moratorium of two years. Scheduled passenger airlines with existing credit facilities as of 31 March 2026 and standard loan accounts will be eligible. Loan sanctions under the scheme must be completed by 31 March 2027.

Civil Aviation Minister Ram Mohan Naidu said the move would help airlines manage short-term liquidity challenges and maintain operations during global disruptions affecting the aviation sector.

The decision follows operational adjustments by Air India, which recently reduced several international services through July 2026 due to higher fuel costs, airspace restrictions and longer flight routings impacting route viability.

Industry body Federation of Indian Airlines had also urged the government to intervene, warning that the sector was facing mounting operational and financial strain.

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