Aviation ministry for ramp-up of aircraft leasing at GIFT City

Seeks FinMin help to nudge banks for developing plane leasing ecosystem

- HARSH KUMAR

To enable Indian banks and financial institutions to develop an aircraft-leasing ecosystem at GIFT City, the Ministry of Civil Aviation has sought support from the Ministry of Finance.

It has also raised concern over slow progress in developing aircraft leasing in India.

According to a senior government official, the civil aviation ministry has laid emphasis on Indian banks adopting globally aligned practices by undertaking asset-backed aircraft financing, supported by a stronger security framework enabled through the passage of the Cape Town Convention Bill. (The Cape Town Convention is a global treaty that guarantees the rights of lessors to repossess leased high-value equipment such as aircraft, engines, and helicopters in the case of a payment default).

"Additionally, the ministry has proposed financial institutions establish aircraft leasing companies in GIFT City through subsidiaries or joint ventures, which would reduce geopolitical risks and promote self-reliance, especially in the light of global disruption like the Russia-Ukraine conflict," the official added.

Indian banks have largely limited their exposure to balance sheets or working-capital financing for airlines, the official said, adding, this has led to unpleasant experiences, dampening their risk appetite.