Four companies express interest toset up aircraft leasing units in GIFT City

Forum Gandhi Mumbai | Updated on February 26, 2021

At least two global aircraft financing and leasing companies, and two domestic aviation companies will soon set up office at the International Financial Services Centre (IFSC) in Gujarat’s GIFT City, according to Civil Aviation Secretary Pradeep Singh Kharola.

On Friday, at a summit organised in Delhi on aircraft leasing in India, Kharola said that those who are setting up their operations at Gujarat’s GIFT city include Ireland-based Acumen Aviation, London-based Investec Aviation Finance, Mumbai-based aviation consultancy, and asset management startup, Vman Aero, and private-jet aggregator JetSetGo Aviation Services Private Limited.

Besides this, Kharola said, “HAL is in the midst of signing a leasing agreement with Alliance Air for two aircraft routing through GIFT City. Besides this, low-cost-carrier SpiceJet has also expressed an interest to lease seaplanes through GIFT City.”

Tax breaks

Ajay Singh, Chairman and MD of SpiceJet, who was one of the panelists, added: “If it works well, (possible leasing of seaplanes via GIFT city,) we may even set up our own leasing company there.”

The recent Budget announced tax breaks on capital gains for aircraft leasing companies for 10 years 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 along with other incentives. Kharola pointed out that prior to this, not a single aircraft was leased out of India because of the higher tax rates.

Speaking about the general policies in India Singh, said, “We have great policies, and great intent but we suffer when it comes to execution. India needs to learn to keep things simple, we often complicate things, by over-regulating. We need to be more strategic because there is a massive opportunity here.”

Globally, China, Hong Kong, Singapore, and Ireland are the leasing hubs. Ministry of Civil Aviation’s Senior Economic Adviser Vandana Agarwal said that earlier, the total taxes and duties paid by lessors in India was at $8.72 million. “Currently, the total taxes and duties paid in Ireland and IFSC India are at par at $3.06 million.”

Speaking about the total taxes and duties of in the IFSC being at par with Ireland at $3.06 million, Ashwini Kumar Tewari, MD, SBI, said, “it needs to be lesser than that rate for us to be able to attract lessors here.”

Agreeing to the same, Singh, said that “while we have rupee funding, which, of course, is good, however, we need lesser taxes to pull business from other countries.”

Funding & insurance

Agarwal further said that while the total value of India’s commercial jet (aircraft) backlog is $19.32 billion, the order book from Indian airlines is the third-largest in the world at 1,028 aircraft and global deliveries are forecast at 40,415 aircraft between 2020 and 2039.

Agarwal said that “NIIF has shown strong interest in financing for aviation, SBI, too, is keen to fund the leasing projects. ICICI Lombard, too, is interested in risk management insurance for the same.”

Published on February 26, 2021

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