Sunday, October 18, 2020

FinMin green signal for aircraft lease financing activities in GIFT City

New Delhi: Regulatory decks have now largely been cleared for making India a hub for financing aircraft purchases and leasing activities with the Finance Ministry notifying “aircraft lease” as a financial product that could be transacted in Gujarat’s GIFT City, which is the country’s sole international financial services centre (IFSC).

The move is expected to pave the way for “onshoring” aircraft leasing and financing, which is the most profitable segment of the aviation value chain, and support local carriers, that had placed orders for more than 1,000 aircraft, making it the third largest order book in the world behind the US and China, say finance industry experts.

“This is a big game changer as we should now be able to take back (aircraft leasing) what we should have been doing in our country. This will give enormous advantage to us as we can onshore what is being done abroad to India,” Tapan Ray, Managing Director & CEO, GIFT City, told BusinessLine.

Ray said the move would encourage foreign providers of aircraft leasing services to set up shop in GIFT city and enable domestic carriers to enter into aircraft financing and leasing activities from Indian shores.

Currently, aircraft leasing transactions are not happening in India, which is a growing market for aircraft. Despite the high demand for leased aircraft, there are no lessors based here.

The Department of Economic Affairs (DEA) has now notified that operating lease and financial lease and any hybrid of operating and financial lease of aircraft or helicopter and engines of aircraft or helicopter or any other parts will be treated as “financial product” under the existing legal framework for IFSs in the country.

The International Financial Services Centres Authority (IFSCA), the sole regulator for economic activities in the IFSCs, is now expected to frame regulations on aircraft leasing and spell out criteria for the players who would be allowed for undertaking aircraft lease financing.

18/10/20 KR Srivats/Business Line

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