ECLGS 5.0 will boost MSME liquidity, preserve jobs amid West Asia crisis: Industry

New Delhi, May 6 (IANS) The Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 will help preserve industrial continuity, jobs and strengthen liquidity access for businesses, particularly micro, small and medium enterprises (MSMEs), industry chambers said on Wednesday. 

Rajeev Juneja, President, PHDCCI, welcomed the scheme as a timely initiative to address pressures from the ongoing West Asia crisis.

"ECLGS is designed to address temporary liquidity shortages faced by industries during periods of economic stress by reducing lending risk for financial institutions," he said.

The scheme provides government‑backed credit guarantees to banks and financial institutions to enable faster, collateral‑free emergency lending to eligible firms across manufacturing, services, trade, logistics, healthcare, hospitality and aviation.

Under the scheme, eligible firms are able to access additional working capital support without the requirement of fresh collateral which will help industries meet operational expenses, maintain production cycles, pay suppliers, and retain employees, he added.

"Further, the scheme will play an important role in stabilising industrial supply chains and protecting employment. By ensuring continuity of credit production stoppages are reduced, vendor payment cycles are maintained and large-scale layoffs were mitigated”, he further said.

SBI Research in a report said that the "timely intervention will ensure liquidity support, protect jobs, sustain supply chains, and strengthen the resilience of the Indian economy."

It estimated that roughly 1.1 crore MSME accounts (around 45 per cent of total MSME portfolio) will be eligible to get benefit from the scheme with per account an average additional credit flow of Rs 2 to 2.3 lakh).

The ECLGS 5.0 is particularly going to benefit the aviation sector which is under distress due to increase in cost of ATF, and passenger traffic drop, the report noted.

"The outstanding bank credit for the aviation sector as of March 2026 is Rs 526 billion and it registered a growth of 14 per cent YoY in March 2026. At full disbursement of Rs 5000 crore for the aviation sector the proposed measure will be 9.5 per cent of Rs 526 billion," it said.

ECLGS 5.0 offers 100 per cent guarantee coverage for MSMEs and 90 per cent coverage for non‑MSMEs and the airline sector.

The scheme will allow eligible borrowers to access additional credit of up to 20 per cent of their peak working capital utilisation during the fourth quarter of FY26, subject to a cap of Rs 100 crore.

--IANS

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