India Launches High-Level Committee for Aircraft Leasing Growth
The Indian aviation sector is set for significant advancements as the High-Level Committee (HLC) on Aircraft Leasing and Financing convened for its inaugural meeting. Chaired by Union Minister of Civil Aviation Shri Ram Mohan Naidu, the committee aims to foster a robust and globally competitive aircraft leasing and financing ecosystem in India, aligning with the nation’s rapidly growing aviation market.
In attendance were key officials from the Ministry of Civil Aviation, the Ministry of Finance, the Department of Commerce, as well as representatives from various industry associations. The meeting marks a response to recommendations made during the previous Aircraft Leasing Summit held in GIFT City.
Minister Naidu opened the discussions by referencing last year’s summit where stakeholders highlighted the necessity for India to ratify the Cape Town Convention. This call has been answered through recent legislative measures such as the Protection of Interests in Aircraft Objects Act. The establishment of the HLC was another significant suggestion stemming from industry feedback, and its first meeting reflects the commitment to these recommendations.
Naidu recognized the commercial viability of aircraft leasing, noting that ongoing legal and regulatory advancements are addressing associated sector risks. He proposed exploring avenues for enhanced bank credit allocation and fostering joint ventures aimed at technical and skill development within the aircraft leasing sphere.
The government’s initiatives are already demonstrating positive results, evidenced by 422 assets being leased through the International Financial Services Centre (IFSC), which include 250 aircraft and 87 engines, along with 474 leasing agreements signed. This surge in leasing activities signifies a growing confidence in the aircraft leasing sector.
Highlighting the sector’s significance, Naidu stated that under Prime Minister Shri Narendra Modi’s leadership, India’s aviation industry is experiencing explosive growth. While the country continues to expand its airport infrastructure, operationalizing an airport every 45 days, the limited availability of aircraft poses a challenge. He pointed out that over 85% of the fleet for Indian carriers is leased, reinforcing the need for ongoing collaboration with stakeholders to strengthen the leasing ecosystem.
The committee deliberated on various topics essential for fostering an enabling environment for aircraft leasing and financing. Key issues included taxation policies, regulatory frameworks, financing availability, and overall business facilitation measures. There was discussion around the potential for rupee-denominated financing options, greater clarity on General Anti-Avoidance Rules (GAAR), and possibly revising the Double Taxation Avoidance Agreement with Ireland.
As discussions came to a close, Minister Naidu emphasized the importance of a coordinated and timely strategy to tackle the highlighted regulatory, financing, and taxation issues. The committee members agreed that proposed initiatives should be developed in consultation with relevant ministries, presenting a pathway toward a predictable policy environment for aircraft leasing and financing in India.
These reforms are anticipated to reshape the landscape of India’s aviation sector significantly, simplifying and accelerating aircraft acquisition and financing processes. A consistent and globally integrated leasing ecosystem is expected to improve the Ease of Doing Business for airlines and investors alike. This progress will not only enhance aircraft availability but also promote greater connectivity, broader travel options, and an overall improved flying experience for passengers, further positioning India as a major global aviation hub.
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