The government plans to introduce an “efficient and flexible” way to finance aircraft and ship leasing, pooling private equity resources through a variable corporate structure as it continues its efforts to expand aircraft leasing activities in the country to promote. Moreover, an incentive has been provided in the 2024-2025 budget to promote domestic aviation and MRO (maintenance, repair and overhaul) work on ships.
“We will seek requisite regulatory approval for providing an efficient and flexible means of financing aircraft and ship leasing, and pooling private equity through a ‘variable corporate structure,’ Finance Minister Nirmala Sitharaman said in her Budget speech .
Specific details about the plan could not immediately be determined.
The Economic Survey, tabled in Parliament on Monday, shows that the government is promoting aircraft leasing through the International Financial Services Center (IFSC) in GIFT City and that more than 28 aircraft lessors have already registered, operating more than 20 aircraft and have leased 49 aircraft. engines.
Sitharaman also mentioned certain incentives for the MRO space.
“To promote domestic aviation and MRO for boats and ships, I propose to extend the period for export of goods imported for repairs from six months to one year. In the same spirit, I propose to extend the period for extend the re-import of goods for warranty repairs of three to five years,” she said.
Currently, items of foreign origin can be imported into India for repair, subject to re-export within six months, extendable up to one year. The duration of export for aircraft and ships imported for maintenance, repair and overhaul has been extended from six months to one year, with a further extension of one year. Kinjal Shah, Senior Vice President & Co-Group Head – Corporate Ratings at rating agency Icra, said the Budget has initiatives to attract companies to set up financing entities in India for aircraft leasing and promote MRO services in India.
“We welcome the Minister of Finance’s announcement to extend the period for the export of goods imported for repairs from six months to one year and to extend the period for the re-import of goods for repairs under warranty from three to five years. provide a major boost to the industry, improving operational efficiency and reducing aircraft downtime,” said Ashish Saraf, VP and Country Director of Thales in India.
Recently, the government also announced a uniform VAT rate of 5 percent on imported aircraft and parts.
“These changes will not only benefit the domestic industry but also position India as a key hub for South Asian airlines in the coming years,” Saraf added.
