SpiceJet Shares Reach Upper Circuit, IndiGo Gains 4% as Government Approves Credit Line Guarantee Scheme for Airlines

Government Announces Emergency Credit Line Guarantee Scheme to Support MSMEs and Airlines

In a move aimed at alleviating the financial distress caused by the ongoing West Asia conflict, the Indian government has approved an Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 with an outlay of Rs 18,100 crore. The scheme is expected to facilitate additional credit flow of Rs 2.55 lakh crore, including Rs 5,000 crore for airlines.

The approval of ECLGS 5.0 has sparked a surge in shares of SpiceJet and InterGlobe Aviation, the parent company of IndiGo. SpiceJet shares hit the upper circuit limit of 5 percent at Rs 12.70 per share on the National Stock Exchange (NSE), while shares of InterGlobe Aviation rose nearly 4 percent to Rs 4,376.7 per share.

The buying interest in the shares is a result of the scheme's potential to address short-term liquidity challenges faced by MSMEs and airlines. Civil Aviation Minister K Rammohan Naidu said that the initiative would help airlines maintain operations amid global disruptions, safeguard jobs, sustain connectivity, and ensure resilience across the aviation ecosystem.

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The scheme aims to provide timely liquidity support to sustain businesses, prevent job losses, and maintain domestic production. Passenger airlines will be eligible for up to 100 percent of peak credit, capped at Rs 1,500 crore, while other institutions can avail up to 20 percent of fund-based working capital, up to Rs 100 crore.

The loan tenor for airlines will be seven years from the date of first disbursement, including a two-year moratorium. For MSMEs and other borrowers, the tenor will be five years, including a one-year moratorium. The scheme will apply to all loans sanctioned from the date of issuance of guidelines by NCGTC up to March 31, 2027.