India to be 3rd largest aviation market by 2022; IFSCA invites comments on aircraft leasing regs: FinMin

New Delhi: India is poised to become the 3rd largest aviation market in the world by 2022, stated the Ministry of Finance in a press note. In January 2019, India’s Ministry of Civil Aviation published a report titled ‘Project Rupee Raftar’ that provided a roadmap to developing an aircraft financing and leasing industry in India. The report identified International Financial Services Centre (GIFT city) for developing aircraft leasing and financing an eco-system in the country. Union Minister of Finance & Corporate Affairs, Nirmala Sitharaman, in her Budget speech in July 2019, had stated, “The time is ripe for India to enter into aircraft financing and leasing activities from India shores,” this is critical for “development of self-reliant aviation industry,” and creating “aspirational jobs in aviation finance, besides leveraging the business opportunities available in India’s Financial Special Economic Zone (SEZ), viz. the International Financial Services Centre (IFSC).”

The Ministry of Finance stated that on 16th October 2020, the Government of India, on the recommendation of IFSCA, had notified ‘Aircraft lease which shall include operating and financial lease and any hybrid of operating and financial lease of aircraft or helicopter and engines of aircraft or helicopter or any part thereof’ as a financial product under the International Financial Services Centres Authority Act, 2019.

Considering that aircraft leasing is a relatively new industry in India and aircraft leasing-related regulations are different across various financial centres, IFSCA has prepared draft regulations for aircraft leasing and in order to get inputs from stakeholders as well as public comments.

The Finance Ministry said many global leasing entities have shown interest to set up a leasing entity in the IFSC in India as it provides them direct reach to one of the fastest-growing aviation markets in the world. Domestic Airlines have also shown interest to undertake these transactions from the IFSC in India as it provides them easy access to global lessors.

Based on the comments from the public, the authority said it will finalise the regulations and provide a framework for aircraft leasing entities to set up operations in IFSC.

The draft regulations can be viewed here (PDF): Consultation paper on proposed International Financial Services Centres Authority (Aircraft Leasing) Regulations for public comments.

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The ID Staff

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