Government raises credit limit under ECLGS for airlines

The Ministry of Finance has enhanced the credit limit available to airlines under the Emergency Credit Line Guarantee Scheme (ECLGS), making them eligible for a sum equivalent to 100% of their outstanding debt, up to ₹1,500 crore.

Earlier, airlines were eligible to borrow up to 50% of their credit outstanding up to ₹400 crore. This is the second time the government has liberalised the scheme for the aviation sector.

The scheme introduced for medium and small enterprises during the outbreak of the COVID-19 pandemic was extended till March 2023 and its guarantee cover expanded by ₹50,000 crore to ₹5 lakh crore.

SpiceJet, which has raised more than ₹300 crore under the scheme and is looking at several options to raise more funds, welcomed the government’s decision. “This will provide a tremendous boost for airlines. I request the government once again for its support for including Aviation Turbine Fuel under GST, which would be a game changer for the entire sector,” the airline’s chairman and managing director Ajay Singh said in a statement.

“Given the volatility in foreign exchange rates, high fuel prices and the recessionary fears in some of the key economies of the world, the aviation sector continues to remain under extreme pressure,” said Deepak Sood, Secretary General of the Associated Chambers of Commerce and Industry of India.

“The earlier decision to extend the ECLGS to March 2023 along with the latest announcement for liberalisation of the same would go a long way to restore the financial stability of the airlines,” he added.