In a significant development, six aircraft leasing firms, including headquartered in Ireland, have been given licenses to operate from GIFT City in Gujarat. Officials said seven more entities have applied for licenses to start operations. The development comes within six months of the Center announcing a regulatory framework to make GIFT City an aircraft leasing hub.
The current demand for leased aircraft is coming from flying clubs, air taxis and leasing of business jets from corporates. “Six licenses have already been issued to firms for conducting aircraft leasing activities from the International Financial Services Center (IFSC). Seven more companies have already applied for licenses, which are under examination. Each of these companies has formed a special purpose vehicle to operate from here. Five of the licenses granted are Indian firms, while the sixth is a subsidiary of an Ireland-based firm,” a senior Gift City official told The Sunday Express.
Acumen Aviation, headquartered in Ireland, was licensed in July 2021. The firm is a significant addition to the aircraft leasing business in India as it is estimated that Ireland alone accounts for 60 per cent of the global leasing market.
Other players in GIFT City are Jetsetgo Aviation, Women Aviation Services, Wales, Rencer Aviation and Millennium Aviation.
According to IFSCA officials, the Union Civil Aviation Ministry is promoting setting up of new flying clubs in the country. “These flying clubs require many training aircraft. These aircraft are not manufactured in India. Presently, there is a huge demand for trainer aircraft from such clubs,” said a state government official.
The demand for leased aircraft is also coming from air-taxi operators. For example, Vaman Aviation has another aircraft leasing deal through GIFT City for an air taxi service in Bengaluru. Third, there is also demand coming from corporates interested in leasing business jets,” said an IFSCCA official.
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.
logical hiccup
The initial challenge faced by the first aircraft lessees in GIFT IFSC was the paucity of an airport. “IFSC itself did not have any airport. So the leased planes have to land somewhere on arrival in India. Hence Mihan SEZ in Nagpur was initially chosen as the spot as it was an airport with one SEZ. So when a newly leased plane lands, it can move to the parking bay which is a part of the SEZ. All airports are custom bound areas and hence we have now requested the government to allow newly leased aircraft to land anywhere in the country. This will further help in leasing of aircraft.
IFSCA had released the regulatory framework for aircraft leasing in February 2021.
As part of one of the regulatory requirements in GIFT City, all firms have to create a Special Purpose Vehicle (SPV) to operate from IFSC. “Earlier, for leasing aircraft, Indian firms had to register their companies in leasing hubs like Ireland. Now they can do it easily from GIFT City,” said the GIFT City official.
Among the various exemptions provided by the government to promote aircraft leasing, lessees get a tax deduction on their income for 10 years, while the Gujarat government is also providing stamp duty exemption. “The aircraft leasing job at Gift City took a lot of system changes. Without these changes, we could not even think of competing with large aircraft leasing centers like Ireland,” the official said.
Adot – Ease of Doing Business
Commercial aviation is booming in India and more than 190 million passengers are using airplanes as a medium of travel COVID-19 Pandemic, GIFT City is all set to become an important hub for aircraft leasing. Till now, Indian entities involved in this sector had to register themselves in overseas hubs such as Ireland to conduct activities related to leasing of aircraft, but with the conduct of leasing activities in the GIFT City premises, these entities simply It is required to manufacture a special purpose vehicle, as mandated under the regulatory framework, to conduct its business. Such entities are also required to maintain a minimum capital of USD 20,000 or its equivalent in freely convertible currency at all times.
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