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ECLGS 5.0 likely to cushion working capital pressures amid West Asia conflict: Crisil Ratings

16 Jun 2026 Evaluate

Crisil Ratings in its latest report has said that the Emergency Credit Line Guarantee Scheme 5.0 (ECLGS 5.0) is likely to play a crucial role in addressing the near-term working capital increase, stemming from the impact of the West Asia conflict, for both micro, small and medium enterprises (MSMEs) and non-MSMEs (Excluding non-banking finance companies, power, telecom and select manufacturing sectors). It also said that the conflict has disrupted global supply chains and driven up crude-linked input costs, and is now stretching trade cycles, leading to elevated working capital requirements across industries.

The report further noted that many eligible companies are likely to take advantage of the scheme, with the strongest traction expected from eight sectors - ceramics, airlines, auto components, diamond polishers and basmati rice exporters, along with three crude-linked industries (Polyester textiles, specialty chemicals and flexible packaging manufacturers) - which are most impacted by cost inflation and supply disruptions. Companies in other sectors with elevated working capital needs, especially MSMEs with bank limit utilisation exceeding 75-80%, may also tap into the scheme.

Besides, Crisil Ratings stated that the incremental support in the form of ECLGS 5.0 could add around 10% of existing debt to the balance sheets of companies rated by it. This debt will have repayment obligations beginning in fiscals 2028 and 2029. The rating agency is expecting that the companies will have sufficient cash flows to service these obligations, given the current balance sheet strength of most entities.

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