The government is all set to execute a ”flexible and efficient” system to finance the leasing of aircraft and ships. This will be made possible by collaborative private equity funds through company structure. This initiative is part of ongoing efforts to promote plane leasing activities within India. ”We will seek the essential legislative compliance to dispense an efficient and flexible mode for funding the leasing of aircraft and ships and bringing funds together of private equity through a variable company structure,” Finance Minister Nirmala Sitharaman said in her Budget speech. Moreover, Budget 2024-25 also announced incentives for lending support to ship MRO (Maintenance, Repair, and Overhaul) services and the domestic aviation sector.
Government plan on Aircraft and Ship leasing
A detailed map of the leasing is yet to be confirmed by the government. As per the Economic Survey 2024, the government is planning to foster aircraft leasing through the International Financial Services Centre (IFSC) at GIFT City. More than 28 aircraft lessors have already enrolled. So far more than 20 aircraft and 49 aircraft engines have been taken on lease by the lessors. Additionally, Sitharaman has also announced incentives for the MRO sector.
Icra’s Senior Vice President & Co-Group Head-Corporate Ratings, Kinjal Shah stated that the initiatives announced in the Budget will lure companies to set up financing entities for aircraft leasing. Meanwhile, it will also boost MRO services in India.
As per current norms, foreign-origin articles can be imported into India for repairs with the constraint that they will be re-exported in six months. The deadline for re-export can be extended up to one year. Now, the export duration for aircraft and vessels imported under MRO activities has increased from six months to one year. A further extension of one year is also allowed.
(With PTI inputs)