4 keen on opening aircraft leasing shops at GIFT city
Ireland’s Acumen Aviation, India-based Vman Aero, financing services company Investec, and business charter operator Jetsetgo have shown interest in starting aircraft leasing businesses at the GIFT City in Gujarat.
Low-cost airline Spicejet has also plans to lease seaplanes from India and Hindustan Aeronautics will explore the possibility of channeling a lease agreement — being discussed with Alliance Air for two-dornier aircraft — through the IFSC.
“India must leverage its growing air traffic to establish a robust aircraft leasing industry, which would finance new aircraft deliveries through its own policies and products,” said Civil Aviation Minister Hardeep Singh Puri.
Civil Aviation Secretary Pradeep Singh Kharola said while India was one of the largest markest for aircraft makers, not a single aircraft has been leased from within India so far. India has created a highly efficient system on aircraft leasing that is comparable to Ireland, China, Hong Kong, Singapore, and elsewhere in the world, he said.
Finance Minister Nirmala Sitharaman said there was a need for aggressive participation of lessors and airlines in the aircraft leasing business in India. She urged Indian and global airlines to participate in the government’s endeavour.
In her Budget speech earlier this month, Sitharaman had said the government was committed to making the IFSC in GIFT City a global financial hub.
Legal decks have been cleared for aircraft leasing businesses to take wings out of Indian shores (GIFT IFSC in Gujarat), with the GIFT City regulator International Financial Services Centre Authority (IFSCA) on Friday issuing a ‘Framework for Aircraft Operating Leases’.
Aircraft lessors at IFSC will enjoy benefits like 10 years of tax holidays, waiving off capital gain taxes on aircraft disposal during the tax holiday period, and will not have to pay basic Customs duty, stamp duty, and withholding tax on interest payments on royalty for nonresidents, among others.
The government believes that the relaxation and tax waivers will enable the aircraft operating lease businesses to be set up at International Financial Services Centres (IFSCS) and address the projected market size of more than $ 50 billion for aircraft leasing in the country. Currently, India has only one IFSC in GIFT City in Gujarat.
According to the draft rules to set up a leasing firm in GIFT city, an entity offering operating lease for an aircraft should have minimum capital of $0.2 million and the operations can be set up in IFSCS by way of a company or a Limited Liability Partnership or a Trust or in any other form as may be specified by the IFSCA.
The lessors will be allowed to transact in freely convertible foreign currency only. They could, however, defray their administrative expenses in Indian rupees by maintaining a separate INR account.