Govt clears emergency credit line in ₹2.55 lakh crore push, including ₹5,000 crore for airlines; Cabinet backs chips, cotton, sugarcane reforms

The Union Cabinet on Tuesday has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, targeting an additional credit flow of ₹2.55 lakh crore—including ₹5,000 crore earmarked for airlines—to help businesses navigate liquidity stress triggered by the West Asia crisis.

Briefing the media, Union Electronics and Information Technology Minister Ashwini Vaishnaw stated the move is aimed at ensuring “timely liquidity support so that businesses can sustain operations, protect jobs and maintain supply chains.”

Prime Minister Narendra Modi, in a series of posts on X, said the Cabinet decisions span support for farmers, industry and strategic sectors. He highlighted the approval of a ₹365 per quintal fair and remunerative price for sugarcane for the 2026–27 season, the launch of a Cotton Productivity Mission to boost output and exports, and new projects under the India Semiconductor Mission aimed at strengthening India’s position in the global chip value chain. He also referred to the clearance of ECLGS 5.0 to support businesses, especially MSMEs, amid global uncertainties, and the approval of a ship repair facility at Vadinar, Gujarat, to enhance maritime capabilities and generate employment.

Under ECLGS 5.0, the National Credit Guarantee Trustee Company Ltd (NCGTC) will provide 100% guarantee coverage for MSMEs and 90% for non-MSMEs and airlines on additional working capital loans.

Eligible borrowers include entities with standard accounts and existing credit lines as of March 31, 2026. The scheme allows incremental funding of up to 20% of peak working capital utilisation in Q4 FY26 (capped at ₹100 crore), while airlines can access up to ₹1,500 crore per borrower under specified conditions.

Credit lifeline, semiconductor push gather pace

Loans under the scheme will carry a five-year tenor with a one-year moratorium for most sectors, while airlines will get a seven-year tenor with a two-year moratorium. The scheme will remain open for sanctions until March 31, 2027, with zero guarantee fee, aiming to cushion businesses against short-term disruptions and preserve economic momentum.

Alongside, the Cabinet approved two semiconductor projects under the India Semiconductor Mission (ISM) with a combined investment of ₹3,936 crore in Gujarat. These include a compound semiconductor and ATMP facility by Crystal Matrix Ltd in Dholera, and an OSAT facility by Suchi Semicon Pvt Ltd in Surat with a capacity of over 1,033 million chips annually. The projects are expected to generate 2,230 skilled jobs.

With these approvals, the total number of ISM projects rises to 12, with cumulative investments touching ₹1.64 lakh crore. The government noted that two projects have already begun commercial shipments, while two more are nearing rollout, indicating accelerating momentum in India’s chip ecosystem.

Cotton mission, sugarcane pricing target farm incomes

The Cabinet also cleared a ₹5,659.22 crore Mission for Cotton Productivity for 2026–31, aimed at raising lint productivity from 440 kg/ha to 755 kg/ha and boosting output to 498 lakh bales. The initiative will initially cover 140 districts across 14 states and is expected to benefit around 32 lakh farmers. Key interventions include high-yielding seed development, modern farming techniques, strengthened testing infrastructure, and branding under Kasturi Cotton Bharat.

In another decision, the government approved a Fair and Remunerative Price (FRP) of ₹365 per quintal for sugarcane for the 2026–27 season at a base recovery rate of 10.25%, a 2.81% increase over the current season. The move is expected to benefit 5 crore farmers and 5 lakh workers linked to the sugar sector. Notably, the FRP remains over 100% higher than the estimated production cost of ₹182 per quintal, with safeguards ensuring no deductions for farmers where recovery falls below 9.5%.

Together, the Cabinet decisions signal a multi-pronged policy approach—combining liquidity support, industrial policy, and farm sector interventions—to sustain growth amid global uncertainties.