The central government is preparing a loan guarantee scheme worth ₹2–2.5 lakh crore to support regions affected by the ongoing conflict in West Asia. The initiative aims to provide relief to MSMEs and export-oriented sectors struggling with supply chain disruptions, rising raw material costs, and logistic expenses.
According to reports, the scheme will be modeled on the Emergency Credit Line Guarantee Scheme (ECLGS) launched during the COVID-19 pandemic. The Department of Financial Services is finalizing the plan, and an official announcement could come within the next 15 days. Under this scheme, companies will receive loans backed by government guarantees, ensuring cash flow remains uninterrupted despite uncertainties.
Sources said the goal is to instill confidence in businesses, allowing them to operate smoothly even in a volatile environment. The government is engaging with affected regions to assess the impact of the West Asia conflict on production and supply chains.
MSMEs and exporters have been particularly affected. Exporters face rising freight costs and logistical hurdles, while MSMEs, highly sensitive to interest rates and dependent on steady cash flow, are under pressure. The new loan guarantee scheme is expected to help these enterprises sustain operations, pay employees on time, and navigate challenging conditions.
During the COVID-19 crisis, ECLGS proved crucial in stabilizing MSMEs, extending ₹3.62 lakh crore in guarantees to 1.19 crore beneficiaries. Despite global uncertainties, India’s export sector has remained resilient, with positive growth expected in 2025–26. Government officials note that even with geopolitical tensions and other economic challenges, India’s goods exports have maintained momentum.