AIRCRAFT FINANCING

India Proposes Regulatory Overhaul to Boost Domestic Leasing

The Government of India is developing a competitive fiscal framework to incentivise airlines to lease aircraft through local hubs rather than established offshore financial centres. New Delhi’s push to domesticate the aircraft leasing market represents a strategic shift toward capturing the massive financial outflows currently flowing to global hubs. By exploring tax concessions and streamlined regulatory pathways within the Gujarat International Finance Tec-City, the Ministry of Civil Aviation aims to reduce the heavy reliance on foreign-denominated transactions. This effort addresses the structural disadvantage local lessors face regarding capital costs and complex depreciation rules that have historically made offshore alternatives more attractive for the country's rapidly expanding carriers. Success hinges on whether these new frameworks can achieve parity with the sophisticated legal and tax certainty offered by international jurisdictions. If the proposed incentives successfully mitigate the risks of asset repossession and high withholding taxes, it could trigger a significant migration of fleet management activities to the subcontinent. This transition would not only provide a hedge against currency volatility for domestic airlines but also foster a mature financial services ecosystem capable of supporting the projected delivery of hundreds of narrow-body aircraft over the next decade. Signals: Legislative amendments to the International Financial Services Centres Authority regulations.