New Delhi: Two global aircraft financing and leasing companies, and two domestic aviation-related firms will be setting up aircraft leasing arms at the International Financial Services Centre (IFSC) in Gujarat’s GIFT City, civil aviation secretary Pradeep Singh Kharola said on Friday.
Speaking at an aircraft leasing summit held at the capital, Kharola said that the list included Ireland-based Acumen Aviation, London-based Investec Aviation Finance, Mumbai based aviation consultancy and asset management firm Vman Aero, and private jet aggregator JetSetGo Aviation Services Private Limited.
The government had earlier in February in the Union budget rolled out incentives and tax holidays on capital gains for aircraft leasing companies setting shop at GIFT City, to attract aircraft lessors to set up shop in India.
"Aircraft financing is also the most profitable segment of the aviation value chain. Currently, foreign financiers and lessors are the biggest beneficiaries of India's growing aviation strength," Kharola said.
"Unfortunately not a single aircraft has been leased from within India so far," he said adding that India has created a highly efficient system on aircraft leasing that is comparable to Ireland, China, Hong Kong, Singapore and elsewhere in the world.
Mint had on 12 February reported that several state-owned banks, including the country’s largest lender State Bank of India (SBI), are in talks with the government to set up aircraft leasing arms at the International Financial Services Centre (IFSC) in Gujarat’s GIFT City.
On Friday, civil aviation ministry's senior economic adviser Vandana Agarwal said that 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 custom duty, stamp duty, and withholding tax on interest payments on royalty for non-residents, among others.
Indian PSBs like the SBI are also keen to be an active participant, she added.
Agarwal said that while the total value of India's commercial jet (aircraft) backlog is $19.32 billion, orderbook from Indian airlines are the third largest in the world at 1,028.
Most Indian airlines prefer to place huge aircraft order with manufacturers like Boeing Co and Airbus SE, which are subsequently financed through sale and lease back (SLB) arrangements made with leasing companies.
A sale and leaseback is a transaction in which the owner sells the aircraft, and then takes it back on lease from the buyer. This kind of deal typically removes the aircraft, and its associated debt, from the carrier’s balance sheet.
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