Profit is much lower, in the range of 1% or so, during the early years of a plane leasing cycle but it surges to as much as 40% in the later years, the people added. About 33 aircraft lessors were registered at GIFT City and more than 60 aircraft and engines have been leased through them as of Jan 31, according to a report from KPMG.
The policy change set to be part of India’s budget proposals announced in February, is an attempt to help the upcoming finance hub gain market share in the US$187 billion ($242.51 billion) global aircraft leasing business. Competition is fierce, with about half of the world’s leased aircraft currently managed from Ireland, and China, Singapore and Malaysia all vying for more of the market.
India’s commercial aircraft leasing market was estimated by Cognitive Market Research to be smaller at about US$4.7 billion in 2023, and growing at 11.8% annually.
India’s Aviation Ministry and the Press Information Bureau did not immediately respond to emails seeking a comment on the plan to extend the tax benefits.
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Pet project
The move to lure more aircraft lessors to GIFT City follows its recent success in attracting global financial institutions, including Mitsubishi UFJ Financial Group Inc and HSBC Holdings Plc, with a slew of tax incentives. The two-decades-in-the-making pet project of Indian Prime Minister Narendra Modi, GIFT city is India’s attempt to challenge financial centres like Singapore, Hong Kong or Dubai.
The proposed tax holiday extension, if implemented, would benefit the aircraft leasing firms of the largest local carriers — IndiGo’s InterGlobe Aviation Financial Services IFSC Pvt Ltd, and Air India’s AI Fleet Services IFSC Ltd.
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A spokesperson for Akasa Air said the smaller budget carrier has also applied for approvals to set up a leasing entity in the low-tax hub.
India’s policy change will also benefit subsidiaries of global companies. Rolls-Royce’s RRPF Engine Leasing (India) IFSC Pvt Ltd, CRJ Aviation Leasing (IFSC) Pvt Ltd, and Willis Lease Finance India IFSC Pvt Ltd are among those registered at GIFT City, according to a regulatory website.
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