Gujarat Chief Minister Bhupendra Patel has inaugurated the second edition of the India Aircraft Leasing and Financing Summit (IALFS 2.0) at the Gujarat International Finance Tec-City (GIFT City) in Gandhinagar. Organised jointly by the Ministry of Civil Aviation, IFSCA, and FICCI, the summit aims to establish India as a competitive global hub for aircraft leasing. Presiding over the event, Union Civil Aviation Minister Ram Mohan Naidu emphasised that India is on track to become the world’s third-largest civil aviation market by 2035, underscoring the urgent need for a robust domestic aviation finance ecosystem.
Background: Breaking the Offshore Dependency
Historically, despite being one of the fastest-growing aviation markets in the world, India has heavily relied on foreign jurisdictions for its aircraft leasing needs. A vast majority of the commercial fleet operated by Indian airlines is leased from companies based in global hubs like Ireland and Singapore. This massive dependency has historically led to significant outflows of foreign exchange and limited the participation of domestic financial institutions in the lucrative aviation finance sector.
To address this critical gap and retain capital within the country, the Government of India has been actively developing a dedicated ecosystem at GIFT City. A major step was taken when aircraft leasing, which includes operating, financial, and hybrid leases, was officially recognized as a “financial product” under the International Financial Services Centres Authority (IFSCA) Act, 2019. The establishment of a unified regulatory framework, coupled with the enforcement of global norms through the Protection of Interests in Aircraft Objects (PIAO) Act, aims to provide lessors with the legal certainty and repossession rights required to confidently operate from India.
Key Highlights from the Summit
The IALFS 2.0 brought together policymakers, financial experts, and aviation industry leaders to collaborate on scaling the leasing ecosystem. During the summit, the discussions were centred around deepening domestic and rupee-denominated financing for the aviation sector.
The participants also addressed crucial legal, tax, and policy challenges, particularly focusing on asset security and dispute resolution, which are the primary concerns for international lessors. Additionally, facilitating the transition to fuel-efficient, next-generation aircraft was a major focal point, aligning with global sustainability goals.
The KPMG Industry Report
A major highlight of the summit was the release of a comprehensive industry report titled “Advancing the aircraft leasing ecosystem in India – From reforms to powering future growth.” This report was jointly prepared by KPMG, the Ministry of Civil Aviation (MoCA), and FICCI. It outlines the strategic roadmap for the sector and highlights the required regulatory and financial reforms to attract billions in annual investments to the Indian leasing market.
Why GIFT City for Aircraft Leasing?
GIFT City provides a highly competitive environment for aircraft lessors through a mix of operational ease and fiscal incentives. Aircraft leasing entities operating from the IFSC enjoy a 10-year tax holiday within a 15-year block. Furthermore, they are exempt from capital gains tax on lease transfers, stamp duty, and withholding taxes on lease rentals or interest paid to non-residents.
From an operational standpoint, the hub provides a single-window clearance system for licensing and registrations. Unlike domestic operations, transactions and invoicing can be handled in foreign currencies like the US Dollar, significantly reducing currency risk. The framework also simplifies the acquisition of leased aircraft by removing the requirement for a “No Objection Certificate” (NOC) from the Directorate General of Civil Aviation (DGCA) for import. This has fueled rapid growth, with the number of registered aircraft lessors in the IFSC reaching 33 by May 2025, managing over 240 aviation assets.
India’s Aviation Trajectory
The domestic aviation sector is undergoing a massive expansion, fueled by rising middle-class incomes and enhanced regional connectivity through schemes like UDAN. Indian airlines have placed record-breaking orders for new aircraft in recent years, pushing the potential leasing market in the country toward the $100 billion mark.
By successfully localising aircraft leasing and financing, India is not only securing its massive aviation supply chain but also creating thousands of high-value jobs in aviation finance, asset management, and corporate law. This domestic capability is a crucial stepping stone for India to achieve its goal of becoming the world’s third-largest civil aviation market by 2035.
Key Takeaways
- Gujarat CM Bhupendra Patel inaugurated the second India Aircraft Leasing and Financing Summit (IALFS 2.0) at GIFT City, Gandhinagar.
- The summit was jointly organised by the Ministry of Civil Aviation (MoCA), IFSCA, and FICCI.
- India is projected to become the world’s third-largest civil aviation market by 2035.
- Aircraft leasing is officially recognized as a “financial product” under the IFSCA Act, 2019, allowing leasing entities to enjoy a 10-year tax holiday within a 15-year block.
- An industry report titled “Advancing the aircraft leasing ecosystem in India” was jointly released by KPMG, MoCA, and FICCI during the event.
