The Cabinet, chaired by Prime Minister Narendra Modi, approved the proposal on Tuesday, 5 May 2026. The government said the scheme would help businesses tackle short-term liquidity stress arising from the conflict.

Under the scheme, passenger airlines can avail additional credit support of up to 100% of peak working capital utilisation during Q4 FY26. The support is capped at Rs 1,500 crore per borrower. MSMEs and other eligible borrowers can avail up to 20% of peak working capital utilisation, capped at Rs 100 crore.

Civil Aviation Minister K. Rammohan Naidu said the move would help airlines manage liquidity challenges and maintain operations amid global disruptions.

According to the official release, the scheme is designed to protect jobs, support supply chains and maintain business continuity.

The loan tenor for airlines will be seven years, including a two-year moratorium. For MSMEs and other borrowers, the tenor will be five years with a one-year moratorium. The scheme will apply to loans sanctioned until 31 March 2027.