This initiative aims to reduce financing risks for international lessors and financiers, potentially lowering costs for airlines and, ultimately, airfares for passengers.
As India prepares to induct more than 2,000 aircraft over the next decade, the Centre has begun an exercise to de-risk aircraft leasing and financing for international lessors and financiers by examining taxation, import and re-export rules, bankruptcy-remote financing structures and protection of lessors’ interests.The aim of the exercise is to reduce financing risks for lessors as well as financiers, which could lower costs for airlines and potentially translate into lower airfares for passengers.A high-level committee constituted by the Ministry of Civil Aviation (MoCA) is examining measures to strengthen the aircraft leasing and financing ecosystem, including alternative financing mechanisms at GIFT IFSC.The committee is assessing existing aircraft financing and leasing arrangements between foreign entities and Indian airline operators.It is examining regulatory and procedural issues relating to direct and indirect taxation, duties, and import and re-export provisions, with the objective of enhancing India’s attractiveness as a destination for aircraft leasing and financing, including at GIFT IFSC.Besides, the committee is examining the feasibility of enabling bankruptcy-remote financing structures within the Indian framework.The objective is to ensure ring-fencing of cash flows for lenders and facilitate effective enforcement of security interests, according to the order.Greater protectionIn simple terms, such structures can provide greater protection to lenders and lessors if an airline faces financial distress, potentially making aircraft financing less risky.Furthermore, the committee is reviewing the implementation of the Protection of Interests in Aircraft Objects Act and assessing its impact on lessors and the overall aircraft leasing ecosystem.The Act was highlighted by MoCA as a key reform aligning India’s legal framework with the Cape Town Convention.It is also recommending measures to address gaps or challenges arising from implementation of the legislation.Additionally, the committee is examining alternative financing mechanisms within GIFT IFSC, including the possible establishment of dedicated funds or infrastructure financing frameworks for aircraft leasing.It is assessing the potential benefits of such mechanisms for lessors and the broader aircraft leasing ecosystem, along with the enabling conditions required, including the possible inclusion of aircraft in the Harmonised Master List of Infrastructure.Global hubThe exercise comes as the government seeks to strengthen GIFT IFSC as a global hub for aircraft leasing and aviation finance.At the India Aircraft Leasing and Financing Summit 2.0 in May, the Ministry of Civil Aviation and International Financial Services Centres Authority (IFSCA) focused on strengthening GIFT IFSC’s role as an emerging global hub.Meanwhile, the committee is examining other policy and regulatory issues arising from existing civil aviation policies, laws and regulatory practices that may require intervention to enable Indian entities to effectively leverage opportunities in aircraft financing and leasing.In addition, the Centre had earlier said that Indian carriers have outstanding deliveries of 1,640 aircraft, while India’s commercial fleet is expected to reach over 2,250 aircraft by 2035, highlighting the scale of the financing opportunity.Published on August 28, 2026
