The International Financial Services Centre (IFSC) at Gift City in Gujarat is experiencing a takeoff in aircraft leasing activity. The first quarter of 2024 (January-March) witnessed a significant surge, with a remarkable 27 new aircraft leasing units registering at Gift City. This substantial rise in the number of companies operating in the sector is likely driven by tax benefits and the ongoing expansion of the aviation industry.

Significant rise

The data reveals that compared to December 2023, there’s been a 129.41 per cent increase, bringing the total number of leased aircraft to 39 by March 2024. This growth isn’t limited to just airplanes; the number of leased engines has also seen a significant rise of 14.55 per cent, reaching a total of 63 leased engines during the same period. The number of leased ground support equipment remained steady at 56 units.

“Gift IFSC is witnessing substantial growth, the globally benchmarked regulations with competitive tax regime is making it easier for both Indian and global institutions to structure their international business at Gift IFSC said Dipesh Shah, Executive Director, IFSC Authority at Gift City.”

At present international banking business and fund management activities have shown tremendous movement to onshore the offshore financial services. The global investment from fund entities is also showing great potential to use Gift IFSC as outbound gateway he added.

Businessline had reported that the total value of aircraft assets leased from Gift City has surpassed the coveted $1 billion mark within a short span of three years. It’s important to note that a significant portion (around 80 per cent) of the leased assets are aircraft engines and ground support equipment, with a total value exceeding $800 million.

Data also highlights a steady increase in the outstanding amount deployed by International Banking Units (IBUs) in the aviation sector over the past three months. In January 2024, the outstanding amount was $235.04 million. This rose to $266.99 million in February 2024, representing a m-o-m increase of $31.95 million (13.59 per cent). By March 2024, the outstanding amount further increased to $384.49 million. This represents a m-o-m increase of $117.5 million (43.68 per cent) and a total increase of $149.45 million (63.52 per cent) since January 2024.

“The credit deployment of IBUs in the aviation sector has been increasing steadily over the past three months. The largest increase was from February to March 2024, which could be due to a number of factors, such as airlines taking delivery of new aircraft or airlines financing upcoming maintenance events,” explained an insider.

Growing trend

There’s a growing trend of aviation companies utilising Gift City for aircraft financing. Tata Group’s Vistara recently secured financing for two Airbus A320neos through Gift City, marking a significant milestone as one of the first Indian carriers to leverage this facility. Air India too joined the bandwagon earlier this year, acquiring its first A350 aircraft through a Gift City lease transaction with HSBC, as part of their massive 470-aircraft order placed earlier.