India introduces tax advantages to create domestic leasing of aircraft: Union budget.
Key sentence:
- India’s finance minister introduced tax benefits for international aircraft leasing firms.
- To compete with Hong Kong as well as Singapore India is building an offshore financial hub called Gujarat International Finance Tec-City, either GIFT City.
On Monday, India’s finance minister introduced tax benefits for international aircraft leasing firms, as being one of the fastest-growing domestic airline markets throughout the world is looking to develop a local leasing industry.
Nirmala Sitharaman during the budget speech:
Nirmala Sitharaman during her budget speech suggested a tax holiday for aircraft-leasing firms as well as tax exemptions for airlines charging lease rentals to foreign leaseholders if they want to be located in the country’s upcoming international finance centre.
India’s air travel market is dominated by budget airlines:
In an attempt to compete with Hong Kong as well as Singapore India is building an offshore financial hub called Gujarat International Finance Tec-City, either GIFT City, to draw foreign investors with near-zero taxation and also top-notch infrastructure.
India’s air travel sector is dominated by budget airlines such as Interglobe Aviation’s IndiGo including SpiceJet Ltd which has hundreds of the latest planes on order with Airbus as well as Boeing.
Indian law firm DMD Advocates partner Sachit Jolly stated:
Usually, aircraft are acquired on sales and leaseback agreements with lessors located in tax-efficient jurisdictions such as Ireland, which introduces foreign currency volatility to domestic airlines.
Throughout the multi-billion dollar aircraft leasing market, China is also the main player.
In 2019, the proposal to set up a local aircraft leasing sector was first declared, however, progress has been poor said Sachit Jolly, partner at DMD Advocates, an Indian law company.
Further, Sachit Jolly stated:
This should enable leasing businesses to start-up shop, but this slipshod attitude of not even alerting regulations for two years must give way towards a more constructive approach for making GIFT City as well as the aircraft-leasing business competitive,” he added.
Managing partner at law firm Sarin & Co Nitin Sarin stated:
Overall, this is a positive move, but that might not result in well-established lessors heading overnight towards India, said Nitin Sarin, law firm Sarin & Co’s managing partner, adding that new as well as smaller lessors such as helicopter fleet owners and also turboprop lessors would profit.
