Cabinet clears ₹18,100-cr credit guarantee scheme for aviation, MSMEs

Cabinet clears ₹365/qtl sugarcane FRP, ₹5,659 crore cotton mission

The Union Cabinet on Tuesday approved an emergency credit guarantee scheme for the aviation and MSME sectors, while also clearing a higher sugarcane price for 2026–27 and a ₹5,659 crore cotton productivity mission.

Credit guarantee scheme for MSMEs, aviation

The Cabinet approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide additional credit support to businesses facing liquidity stress due to the West Asia situation, Information and Broadcasting Minister Ashwini Vaishnaw said at a press briefing.

 

"The scheme will offer 100 per cent guarantee coverage for MSMEs and 90 per cent for non-MSMEs and airlines through the National Credit Guarantee Trustee Company Limited (NCGTC) to lending institutions," he said.

 

 

Eligible borrowers include MSMEs, non-MSMEs with existing working capital limits, and scheduled passenger airlines with outstanding credit as of March 31, 2026, provided their accounts are standard, the Centre said in a statement.

 

Under the scheme, additional credit of up to 20 per cent of peak working capital utilised in the fourth quarter of FY26 can be extended, capped at ₹100 crore. For airlines, the limit is up to 100 per cent, capped at ₹1,500 crore per borrower, subject to specified conditions.

 

Loans for MSMEs and other businesses will have a tenure of five years, including a one-year moratorium, while airline loans will have a seven-year tenure with a two-year moratorium.

 

The scheme will apply to loans sanctioned up to March 31, 2027. It is aimed at helping businesses “tide over the challenges arising from the West Asia conflict” and is expected to support operations, protect jobs, and sustain supply chains.

Sugarcane FRP fixed at ₹365 per quintal

The Cabinet Committee on Economic Affairs also approved a fair and remunerative price of ₹365 per quintal for sugarcane for the 2026–27 season at a basic recovery rate of 10.25 per cent, according to a separate statement.

 

Farmers will receive a premium of ₹3.56 per quintal for every 0.1 per cent increase in recovery above this level, with a corresponding reduction for lower recovery.

 

The government has decided that no deduction will be made for mills where recovery is below 9.5 per cent, with such farmers to be paid ₹338.3 per quintal.

 

The approved FRP is about 100.5 per cent higher than the estimated cost of production of ₹182 per quintal and is 2.81 per cent higher than the ongoing 2025–26 season.

 

The decision is expected to benefit about 5 crore sugarcane farmers and around 5 lakh workers in sugar mills and related sectors.

₹5,659 crore mission for cotton sector

The Cabinet also approved a ₹5,659.22 crore outlay for the “Mission for Cotton Productivity” for the period 2026–27 to 2030–31, an official statement said.

 

The programme aims to address productivity and quality challenges in the cotton sector and is aligned with the government’s 5F vision spanning the entire value chain from farm to global markets.

 

It will focus on developing high-yielding, climate-resilient and pest-resistant seed varieties, scaling up modern farming techniques, and improving quality through better processing and testing infrastructure.

 

The mission will be implemented by the Ministries of Agriculture and Textiles, with participation from ICAR, CSIR and State Agricultural Universities, initially covering 140 districts across 14 states and about 2,000 processing units.

 

The government aims to increase cotton production to 498 lakh bales by 2031 and raise productivity from 440 kg per hectare to 755 kg per hectare, benefiting around 32 lakh farmers.