The proposed Aircraft Objects Bill is expected to propel India’s GIFT City, or Gujarat International Finance Tech-city-based International Financial Services Centre, as an aviation leasing hub along with lowering the cost for the domestic airline industry, Boeing India and South Asia President Salil Gupte told businessline.
businessline was the first to report in January 2025 that the Union Cabinet approved the Protection and Enforcement of Interests in Aircraft Objects Bill, 2024, to usher in further reforms in the civil aviation sector.
The bill is designed to lower leasing cost of airlines.
At present, the bill is before the Rajya Sabha and is expected to be passed in the next session of Parliament, which is to begin on March 10, 2025.
If passed by Parliament, the resulting Act could potentially reduce airfares by ensuring a lower risk premium paid to lessors. The Act will guarantee lessors absolute rights to repossess their leased aircraft in case of a payment default by an airline or an operator.
Besides, the bill presents some variable benefits for lessors to set up shops at the GIFT City, such as stronger legal certainty, streamlined asset recovery, increased investor confidence, reduced leasing costs for airlines, and a growing aviation financing ecosystem.
The Act’s enshrined benefits for the GIFT City are important for India as the majority of commercial aircraft in India are leased and another 1,700 are on order. Till now, airlines in India depended on lessors based out of Ireland or Dubai among other places.
According to Gupte, the Act will not only bring in a much-needed reform in the sector but also boost the prospects of the multi-billion-dollar business at the GIFT City.
Lower costs
“The Aircraft Objects Bill is expected to benefit India’s aviation sector by lowering costs, enhancing security, and attracting more leasing firms,” Gupte said.
“It will reduce leasing and financing costs for airlines while boosting lessor confidence in Indian carriers, expanding their financing options. Additionally, the bill is a significant step forward for GIFT City, addressing a regulatory challenge and strengthening its position as an aviation leasing hub.”
As per some industry estimates, India-based airlines would have had to bear nearly ₹10,000 crore due to high-risk premiums if a bill such as the Aircraft Objects Bill, 2024 was not considered.
On the Budget, Gupte pointed out that it aims to strengthen India’s air cargo sector by recognising its vital role in export and economic growth.
“Increased capital allocation for air cargo infrastructure development is expected to create a robust ecosystem, driving demand for air freighters.”
Gupte noted that India’s domestic air cargo trade is forecast to continue the rapid growth at 6.9 per cent per year over the next two decades, adding that the expansion of India’s e-commerce sector is contributing to the demand for “efficient and reliable” logistics and transportation solutions.
India’s dedicated freighter fleet nearly tripled over the past six years, from a fleet size of six 757 freighters in 2017 to 18 freighters, including the 737-800BCF, in 2024.
In addition, he said that India remains the world’s fastest-growing commercial aviation market due to strong economic and trade growth, as well as rising household incomes and investments in infrastructure and development.
Recently, the global aerospace major in its Commercial Market Outlook (CMO) predicted that South Asia’s commercial aircraft fleet will grow nearly fourfold over the next 20 years to 2,835, propelled by the demand from India-based airlines.
Accordingly, 90 per cent or over 2,500 aircraft are expected to be delivered to India-based airlines in the next 20 years, fuelled by greater demand and a rise in air traffic, sustained economic growth, improved connectivity, and policies that support air travel liberalisation.