India must establish a robust aircraft leasing industry to meet its future needs says civil aviation minister Puri

2021-02-27 14:22:31 Logistics News (Airlines & Aviation)

India must leverage its growing air traffic to establish a robust aircraft leasing industry, which would finance new aircraft deliveries through its own policies and products, Civil aviation Minister Hardeep Puri said.

Addressing the India Aircraft Leasing Summit 2021- Rupee Raftaar held here , Shri Puri said that it is vital to develop this new line of business in India for financial services and add India on the map of global financial centers for international financial services.

India will need 1,750-2,100 aircraft in next 20 years as per predictions of Airbus and Boeing

India will need 1,750-2,100 aircraft valued at over ₹20,40,000 crore (~USD 290 billion), with an estimated 100 deliveries each year, i.e.about ₹35,000 crore or USD 5 billion of financing each year commensurate with the growth potential of the Indian aviation sector in the next 20 years as per predictions of Airbus and Boeing. He added that the share of aircraft on lease globally has increased dramatically over the last few decades. It has escalated from 2 per cent in 1980 to over 41 per cent in 2018, and is estimated to have reached 50% in 2020.

Aircraft financing is the most profitable segment of the aviation value chain and currently, foreign financiers and lessors are the biggest beneficiaries of India's growing opportunity.He informed that several initiatives have been taken by the Government to develop Aviation leasing and Financing Hub in India which included Financing, MRO, manufacturing etc. to rapidly expand this business in India.

The Rupee Raftaar working group on aircraft leasing and financing therefore has holistically taken the 360 degree review of existing and foreseeable barriers to Aircraft Financing by local Indian financiers in India after extensive consultations with RBI, Banks, NBFCs – Asset financing / leasing companies, Airlines, Airports public and Private corporations and other stakeholders.

In anticipation of the long-term requirements of the country’s aviation industry, the government envisages to create an eco-system through Gujarat International Finance Tec-City (GIFT) city which is an IFSC in India, wherein the flexibility of regulations needed in the industry will not affect the mainland regulations.

India has created a highly effective system for aircraft leasing and financing

India has created a highly effective system for aircraft leasing and financing which is comparable to that of Ireland, China, HongKong, Singapore and elsewhere.The purpose is to grow India’s financing market which is critical to the development of aviation industry, creating high aspirational jobs in the sector and in turn propelling India’s growth. The initiative has the potential to deliver following key benefits: -

Indian Aviation sector is on a path to recovery

The Minister said that the COVID-19 pandemic has stagnated the economic activities globally, but Indian aviation sector, has shown resilience, recalibration and resurgence despite the cascading impact of various aspects of world trade. He added that the Indian Aviation sector is on a path to recovery and has exhibited significant recovery to pre-Covid lev India has created a highly effective system for aircraft leasing and financing els in terms of passenger movement and cargo operation. Concerted efforts are being made to attract new business into India, such as through aircraft leasing, financing, and MRO operations.

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