CII proposes 20 points policy action for Finmin, RBI to face war challenges
April 05, 2026
CII proposes 20 policy actions for Finmin and RBI to support MSMEs amid war-related economic challenges, enhancing credit and liquidity measures.
Industry chamber, Confederation of Indian Industries (CII) on Sunday proposed 20 points policy agenda for government and the Reserve Bank of India to mitigate the risk on account of war in West Asia.
The industry body has suggested setting up of a time-bound Conflict-Linked Emergency Credit Line Guarantee Scheme (CL-ECLGS), similar in spirit to the Emergency Credit Line Guarantee Scheme (ECLGS) implemented during the pandemic. This will help “additional collateral-free working capital can be extended to affected enterprises through government-backed guarantees, particularly targeting MSMEs, exporters and gas-dependent sectors,”
At the same time, it proposed RBI to consider a temporary and clearly defined three-month moratorium and restructuring window for MSMEs, especially exporters and ancillary units linked to export supply chains. “This may include calibrated flexibility in asset classification norms, with a defined deferment before Special Mention Account (SMA) and Non-Performing Asset (NPA) recognition is triggered, limited to sectors where disruption is demonstrable,” it said.
Also, the RBI could institute a Special Refinance Window for MSMEs and other affected sectors, complemented by targeted liquidity support through instruments such as Targeted Long Term Repo Operations (TLTRO), thereby enabling banks and non-banking financial companies (NBFCs) to continue extending credit at reasonable cost to productive sectors.
Another action point could banks to reassess and enhance working capital limits in deserving cases, particularly for export-oriented and gas-dependent units facing temporary stress. “A calibrated increase in cash credit limits of up to twenty per cent, coupled with concessional lending terms during the disruption period, would provide meaningful operational relief,” it said while adding that a temporary reduction or waiver of administrative banking charges for MSMEs and affected sectors could add the benefit.
In order to sustain foreign capital inflows into primary markets during a period of heightened global uncertainty, CII called for consideration of a temporary exemption from long-term capital gains tax for foreign investors in primary market investments, with the qualifying holding period extended from two to three years. “This calibrated incentive would signal stability, encourage patient capital, and help offset any flight-to-safety sentiment triggered by the disruption,” the industry body said.
Further, the government and RBI could institutionalise a standing Economic Shock Response Framework with pre-agreed, scenario-based policy playbooks calibrated to defined trigger points such as including oil price thresholds at $100, $150, and $200 per barrel, that bring together fiscal, monetary, trade, and regulatory levers with clear coordination protocols across ministries and regulators.
There is also a policy suggestion for a special foreign exchange (forex) swap window may be considered for oil and gas public sector undertakings (PSUs), enabling them to meet their US dollar requirements in a manner that reduces volatility in the foreign exchange market and limits undue pressure on reserves.
Commenting on the evolving situation, Chandrajit Banerjee, Director General, CII emphasised that India’s experience during previous crises has shown that coordinated fiscal and monetary action can significantly strengthen resilience. “The next phase of policy response may therefore need to focus on targeted liquidity support, credit facilitation, trade cost management and foreign exchange stability,” he said.
Published on April 5, 2026
The industry body has suggested setting up of a time-bound Conflict-Linked Emergency Credit Line Guarantee Scheme (CL-ECLGS), similar in spirit to the Emergency Credit Line Guarantee Scheme (ECLGS) implemented during the pandemic. This will help “additional collateral-free working capital can be extended to affected enterprises through government-backed guarantees, particularly targeting MSMEs, exporters and gas-dependent sectors,”
At the same time, it proposed RBI to consider a temporary and clearly defined three-month moratorium and restructuring window for MSMEs, especially exporters and ancillary units linked to export supply chains. “This may include calibrated flexibility in asset classification norms, with a defined deferment before Special Mention Account (SMA) and Non-Performing Asset (NPA) recognition is triggered, limited to sectors where disruption is demonstrable,” it said.
Also, the RBI could institute a Special Refinance Window for MSMEs and other affected sectors, complemented by targeted liquidity support through instruments such as Targeted Long Term Repo Operations (TLTRO), thereby enabling banks and non-banking financial companies (NBFCs) to continue extending credit at reasonable cost to productive sectors.
Another action point could banks to reassess and enhance working capital limits in deserving cases, particularly for export-oriented and gas-dependent units facing temporary stress. “A calibrated increase in cash credit limits of up to twenty per cent, coupled with concessional lending terms during the disruption period, would provide meaningful operational relief,” it said while adding that a temporary reduction or waiver of administrative banking charges for MSMEs and affected sectors could add the benefit.
In order to sustain foreign capital inflows into primary markets during a period of heightened global uncertainty, CII called for consideration of a temporary exemption from long-term capital gains tax for foreign investors in primary market investments, with the qualifying holding period extended from two to three years. “This calibrated incentive would signal stability, encourage patient capital, and help offset any flight-to-safety sentiment triggered by the disruption,” the industry body said.
Further, the government and RBI could institutionalise a standing Economic Shock Response Framework with pre-agreed, scenario-based policy playbooks calibrated to defined trigger points such as including oil price thresholds at $100, $150, and $200 per barrel, that bring together fiscal, monetary, trade, and regulatory levers with clear coordination protocols across ministries and regulators.
There is also a policy suggestion for a special foreign exchange (forex) swap window may be considered for oil and gas public sector undertakings (PSUs), enabling them to meet their US dollar requirements in a manner that reduces volatility in the foreign exchange market and limits undue pressure on reserves.
Commenting on the evolving situation, Chandrajit Banerjee, Director General, CII emphasised that India’s experience during previous crises has shown that coordinated fiscal and monetary action can significantly strengthen resilience. “The next phase of policy response may therefore need to focus on targeted liquidity support, credit facilitation, trade cost management and foreign exchange stability,” he said.
Published on April 5, 2026