This GIFT Needs Money

With GIFT-City, India is betting big on the multi-billion dollar aircraft leasing industry, but crucial financing is missing

- MANISH PANT

IN A BID TO take a big bite of the global pie, aircraft leasing companies that start operations from the International Financial Services Centre (IFSC) in Gujarat International Finance Tec-City (GIFT-City) have been exempted from paying corporate and withholding tax on leasing transactions. Besides, more concessions are available to them if they lease aircraft from the multi-services special economic zone near Ahmedabad.

The exemptions are part of the government’s efforts to transform the country into a global aircraft leasing hub to rival centres such as Dublin or Singapore by incentivising foreign lessors to commence operations from here. Even as the move has been described as crucial in making the world’s third-largest domestic aviation market self-reliant in leasing, experts have expressed concerns over a lack of provisions to make financing for such deals easily available.

The absence of a robust financing framework in GIFT-City may prove to be a dampener for aircraft leasing to take off meaningfully, as the industry flourishes in centres that have easy access to capital. A failure, then, would mean missing out on the opportunity to capture a slice of the $170-billion global aircraft leasing industry, experts say. “Aircraft leasing has two parts to it—aircraft trading and aircraft financing. Any capital-intensive industry requires financing, and the aircraft is a hard asset. However, the leasing business needs strong financial support,” says Rohit Tomar, Partner at aviation advisory firm Caladrius Aero.