New Delhi: To shield the economy from effects of the West Asia conflict, the Union cabinet on Wednesday cleared two major packages worth nearly ₹20,000 crore. These include a ₹10,000-crore fuel price stabilization fund for aviation and a ₹9,585-crore clean transport plan for Delhi-NCR.
Earlier reports indicated plans for such a stabilization fund covering petroleum products.
The aviation fund will provide interest-free advances to oil marketing companies. This will allow them to supply aviation turbine fuel at stable rates to Indian carriers and limit the effect of rising global jet fuel prices, their largest cost item.
Separately, the clean mobility plan will promote replacement of older commercial vehicles with BS-VI or electric models. It aims to cut pollution in the capital region and reduce fuel use along with oil imports.
At a Wednesday briefing, minister Ashwini Vaishnaw noted that international aviation fuel prices jumped from ₹60.5 per litre in March to ₹142 in May due to the West Asia crisis that began on 28 February. The fund seeks to manage this volatility.
He added that the plan would limit the transfer of fuel price increases to passengers and protect oil companies from losses on costly fuel.
Oil firms will receive compensation when global prices exceed an approved benchmark. The government has set a cap of ₹75.6 per litre for domestic supply.
When prices ease, the compensation will be reclaimed from the companies and returned to the Consolidated Fund of India. The process continues until full recovery.
Financed by the Economic Stabilisation Fund launched in March with ₹57,381 crore, the scheme covers all willing Indian scheduled airlines for domestic and international flights.
Implementation occurs via agreements between airlines and oil companies, signed also by the aviation and petroleum ministries.
Under the one-time measure, carriers will purchase fuel from oil firms for 36 months, subject to yearly review and ending when support is fully recovered.
The scheme may be extended if funds remain unused.
IndiGo welcomed the move in a filing, calling it timely relief that recognizes aviation’s role in connectivity and growth.
A separate ₹5,000 crore allocation was made for the sector under the Emergency Credit Line Guarantee scheme 5.0 in March 2026.
While domestic prices are capped, international purchases remain at import parity rates, leaving carriers exposed. The fund targets this volatility.
The clean transport scheme is expected to lower vehicle emissions and improve air quality by speeding the shift to cleaner technologies.
It will offer incentives for owners of older trucks and buses to switch to BS-VI or stricter vehicles or electric models.
About 207,000 owners, including 191,000 trucks and 16,329 buses, across Delhi-NCR states are expected to benefit.
The ₹9,585-crore outlay includes ₹5,041 crore from the Centre and ₹1,601 crore in state tax concessions. Auto firms will provide 8% discounts on new vehicles.
The Centre will offer 5% interest subvention on five-year loans, fuel vouchers up to ₹4,800 monthly, and lump-sum support for electric purchases.
States will waive registration fees and grant up to 100% motor vehicle tax relief for new vehicles and 50% for used ones over 10 years, plus clear pending dues on old vehicles.
