New Delhi, May 6 -- India's federal cabinet on Tuesday approved a credit guarantee plan with capital allocation of 181 billion rupees ($1.9 billion) to help businesses and airlines cushion the impact of the war in Iran.

The government will provide sovereign guarantees to lenders that extend additional loans to eligible borrowers, according to a statement. The program is expected to "help businesses maintain their operations, protect jobs, and sustain supply chains," it said.

The emergency credit line guarantee across all sectors is similar to the relief that was provided during the Covid-19 pandemic to micro, small and medium firms, in the form of collateral-free automatic loans. Government data shows that more than 11 million guarantee...