The Union Cabinet Likely to approve a Rs 2.5 lakh crore Credit Line Guarantee Scheme (CLGS) to support MSMEs and provide targeted relief to the aviation sector, including a proposed Rs 5,000 crore credit window for airlines impacted by the Iran conflict, sources told NDTV Profit.
The proposal, being finalised by the Department of Financial Services (DFS), under Finance Ministry- and is expected to be taken up at the Union Cabinet meeting scheduled at 5 PM today.
The scheme aims to expand the government's credit backstop framework, enabling lenders to extend collateral-free or partially guaranteed loans to stressed but viable businesses facing disruptions due to geopolitical tensions.
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Aviation Sector Relief
A dedicated Rs 5,000 crore credit window for airlines is likely to be carved out within the broader scheme framework. The move is aimed at easing liquidity stress as carriers grapple with higher fuel costs, longer flight routes, and rising insurance premiums amid instability in West Asia.
MSMEs, a key pillar of India's economy, are expected to be the primary beneficiaries of the broader credit guarantee scheme, especially those hit by supply chain disruptions and input cost volatility.
Officials indicated the contours could be similar to pandemic-era emergency credit schemes, but with sharper sectoral targeting.
Other Key Agenda Item
The Cabinet is also likely to consider the Rs 48,862 crore Galathea Bay International Container Transshipment Port project in Great Nicobar Island, seen as a strategic push to strengthen India's position in global maritime trade.
The project has secured an in-principle recommendation from the Public Private Partnership (PPP) Appraisal Committee, which discussed it on March 17 and 19 and recommended it for consideration by the competent authority.
Designed as a global transshipment and logistics centre leveraging its proximity to the Strait of Malacca, the project includes an international container transshipment terminal, a dual-use international airport, power infrastructure, and new urban townships. Currently, nearly 75% of India's transshipped cargo is handled at foreign ports — predominantly Colombo, Singapore, and Port Klang.
The government has been working on the scheme as the West Asia crisis deepened. MSMEs and export-oriented sectors are facing acute cash flow stress from soaring input costs, supply chain disruptions, and elevated freight charges since the US-Israel strikes on Iran in late February. Global crude oil prices have also surged nearly 50% since then, putting domestic industries under significant pressure.
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