GIFT City Aircraft Leasing to Double in 2 Years, Says Govt

The aircraft leasing ecosystem in India's GIFT City is projected to double in the next two years, according to Union Civil Aviation Minister Kinjarapu Ram Mohan Naidu. This rapid expansion is a key part of the government's strategy to establish an India aviation finance hub, supported by significant regulatory changes and growing participation from the nation's largest airlines. The development signals a major push to onshore the multi-billion dollar leasing business, which has historically been dominated by international jurisdictions.

At the core of this growth is a robust framework designed to attract investment and build confidence. The International Financial Services Centres Authority (IFSCA), the primary regulator, has already registered 38 aircraft lessors within the Gujarat International Finance Tec-City (GIFT City). According to data from the Gujarat Chief Minister's Office, these lessors now manage over 370 aviation assets with a combined value of approximately $5.8 billion. This initiative directly addresses the massive expansion of India's commercial aviation market, with the national fleet expected to grow from its current size to 1,100 aircraft by 2027 and 2,250 by 2032, as projected by the Ministry of Civil Aviation.

Regulatory Reforms and Airline Commitments

A critical enabler of this growth has been a series of India aircraft leasing reforms. The recent passage of the Protection of Interests in Aircraft Objects Act, 2025, aligns India's legal system with the Cape Town Convention (CTC). This international treaty strengthens creditor rights and establishes clear, statutory timelines for aircraft repossession, significantly de-risking investments for lessors. Further bolstering this framework is a 20-year tax holiday for leasing entities established in the International Financial Services Centre (IFSC), providing long-term financial predictability.

Indian airlines are actively leveraging this new domestic hub. IndiGo, through its entity InterGlobe Aviation Financial Services IFSC, plans to expand its GIFT City portfolio from 75 to nearly 150 aircraft by March 2027. Similarly, Air India aims to increase its leased fleet within the hub from over 50 to 76 aircraft in the same timeframe. New entrant Akasa Air has also established Akasa Air Leasing IFSC Private Limited (AALI), with plans to lease approximately 60 aircraft over the next five years through its GIFT City arm.

Strategic Context and Global Precedents

India's strategy mirrors successful efforts by other nations to capture domestic leasing markets. The establishment of Ireland's aviation leasing hub in the 1980s, driven by favorable tax policies, serves as a key precedent. More recently, China's creation of the Dongjiang Free Trade Port in Tianjin successfully onshored the majority of its domestic aircraft leasing. By implementing similar policies, India aims to replicate this success for its own large and rapidly growing market.

Union Minister Naidu stated that the goal is to complement, not just compete with, established hubs like Dublin and Singapore. The focus is on building a complete ecosystem where transactions are originated and managed, not just registered. This onshoring trend is expected to provide significant benefits for Indian carriers, with industry estimates suggesting potential savings of up to $500 million annually due to lower financing risk premiums and leasing expenses.

However, some challenges remain. According to analysis from aviation legal experts, while the reforms are substantial, the lack of a fully bankruptcy-remote Special Purpose Vehicle (SPV) framework under Indian law could still make some international financiers cautious compared to more mature jurisdictions.

What Comes Next

The trajectory for GIFT City's aviation finance sector is clearly defined for the near future. Several key milestones are anticipated as the ecosystem matures:

• By March 2027, IndiGo is confirmed to expand its GIFT City-based fleet to nearly 150 aircraft.
• By March 2027, Air India will increase its portfolio within the IFSC to 76 aircraft.
• By 2027, India's total commercial aircraft fleet is expected to cross the 1,100 mark, creating sustained demand for domestic leasing solutions.

Efforts are also underway to develop deeper pools of domestic capital, including promoting rupee-denominated aviation financing to mitigate foreign exchange risks for airlines and lenders.

Why This Matters

Developing a domestic aircraft leasing hub is a strategic imperative for India's aviation ambitions. It reduces reliance on foreign jurisdictions, lowers operational costs for airlines, and insulates them from currency volatility. For the broader financial sector, it creates a new, high-value service industry. This move positions India not just as a major market for air travel, but as an emerging powerhouse in the global aviation finance landscape.