In a significant development, six aircraft leasing firms including one headquartered at Ireland — the global hub for aircraft leasing — have been given licenses to operate from GIFT City in Gujarat. Officials said that seven more entities have applied for licences for starting operations. The development comes within six months of the Centre announcing a regulatory framework for making GIFT City an aircraft leasing hub.
The current demand for leased aircrafts is coming from flying clubs, air taxis and from corporates leasing out business jets. “Six licenses have already been issued to firms for conducting aircraft leasing activities from International Financial Services Centre (IFSC). Seven more companies have already applied for licenses which are currently being scrutinised. Each of these companies have formed a Special Purpose Vehicle to operate from here. Five of those given licences are Indian firms, while the sixth is a subsidiary of a firm based in Ireland,” a senior official from GIFT City told The Sunday Express.
Acumen Aviation, having headquarters in Ireland was given license in July 2021. This firm is an important addition to aircraft leasing business in India as it is estimated that Ireland alone commands 60 per cent of the global leasing market.
The others players in GIFT City are JetSetGo Aviation, Vman Aviation Services, Wels, Rensar Aviation and Millennium Aviation.
According to IFSCA officials, the Union Ministry of Civil Aviation is promoting setting up of new flying clubs in the country. “These flying clubs require a number of training aircraft. These aircrafts are not manufactured in India. Currently, there is a huge demand for trainer aircrafts from such clubs,” said a state government official.
The demand for leased aircrafts is also coming from air-taxi operators. For instance, the deal for a second aircraft to be leased through GIFT City by Vman Aviation is for an air taxi service in Bengaluru. Thirdly, the demand is also coming from corporates interested in leasing business jets,” the IFSCA official said.
While the Airbus H125 helicopter leased from Vman is yet to be delivered, the Hawker 800 XP aircraft leased by JetSetGo Aviation became the first aircraft to be leased through GIFT IFSC in August 2021.
The initial challenge faced by the first aircraft lessors in GIFT IFSC was lack of an airport. “IFSC itself did not have an airport. So the leased aircraft have to land somewhere when they come to India. So initially MIHAN SEZ in Nagpur was chosen as spot as it was an airport with an SEZ. So when a newly leased plane lands, it can go into the parking bay which is a part of the SEZ. All airports are custom bound areas and so now we have requested the government to allow newly leased aircrafts to land anywhere in the country. This will further help aircraft leasing.
IFSCA had issued the regulatory framework for aircraft leasing in February 2021.
As part of one of the regulatory requirements at GIFT CIty, all the firms have to create a Special Purpose Vehicle (SPV) to operate from the IFSC. “Earlier, to lease aircrafts, Indian firms had to register their companies in leasing hubs like Ireland. Now they can easily do it from GIFT City,” the official from GIFT City said.
Among the various sops provided by the government to promote aircraft leasing, lessors get tax deductions on their income for 10 years, while Gujarat government is also providing stamp duty exemptions. “A lot of changes had to be brought into the system to make the aircraft leasing work in GIFT City. Without these changes, we could not have even thought of competing with large aircraft leasing hubs like Ireland,” the official added.
Edot- Ease of doing business
With commercial aviation booming in India and with over 190 million passengers using aeroplanes as a medium of travel prior to the Covid-19 pandemic, GIFT City seems all set to become an important centre for aircraft leasing. Till now, Indian entities involved in this sector had to register themselves in overseas hubs like Ireland to conduct activities related to leasing of aircrafts, but with leasing activities becoming operational in the GIFT City campus, these entities simply need to form an special purpose vehicle, as mandated under the regulatory framework, to conduct their business. Such entities also have to maintain a minimum capital of USD 20,000 or it’s equivalent in freely convertible currency, at all times.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines