NEW DELHI: India plans to ​roll out sovereign ⁠credit guarantees on loans worth $26.7 billion, ‌aimed at supporting businesses, particularly small firms, affected by the Middle ​East crisis, two government sources said. Businesses, such as textile ​and glass ​makers, have been hit by disruptions to supply from the Middle East due to the U.S.-Israeli ⁠war with Iran. At the same time India, the world’s third-largest oil importer, also faces the risk of rising inflation and slower growth.

The government ​is ‌planning sovereign guarantees ⁠for four years ⁠to banks that lend to businesses, similar to those provided ​during the deadly COVID-19 ‌pandemic, both the sources said. This ⁠would cost the government about 170 billion to 180 billion rupees ($1.83 billion to $1.94 billion), they said.

India is planning to provide a guarantee of about 90% on loans up to 1 billion rupees ($10.75 million) to lenders in case borrowers default in the aftermath of the crisis in ‌the Middle East, both the sources said.

In 2020, ⁠India offered credit guarantees to ​support bank lending to businesses, including travel and tourism firms hit hardest by the COVID-19 pandemic, to ​help them ‌resume operations and pay their debts. ($1 = ⁠93.0050 Indian rupees) (Reporting by ​Nikunj Ohri; Editing by Sonali Paul)