The move is expected to help it compete with international aircraft leasing hubs such as Ireland and Singapore. Experts say it already provided strong support to Indian airlines at a time when the aircraft leasing market could reach a size of US$ 100 billion. 

Convincing international companies to shift operations from offshore hubs, however, remains a challenge. Currently, nearly 85 percent of commercial aircraft in India are leased from foreign companies, resulting in a substantial annual outflow of foreign currency.

Who Will Benefit

Aircraft leasing will benefit airlines, aircraft lessors, cargo operators, flying training institutes, and ground support equipment companies.

K. Rajaraman, Chairman of the International Financial Services Centre Authority (IFSCA) in GIFT City, said, “The momentum witnessed in aircraft leasing is structural — not temporary or fragmented. Indian airlines have placed some of the world’s largest aircraft orders, and leasing from GIFT IFSC is now expanding to aircraft, engines, and specialised assets.”

According to a report by PwC India, the favorable policies, modern infrastructure, and strong regulatory framework of GIFT IFSC will enable India to compete with countries like Ireland and Singapore. 

Dipesh Shah, Executive Director (Development), IFSCA, said, “The aircraft and ship leasing sector, which was previously dominated by international financial centers, is now developing within IFSC, reflecting India’s emergence as a global player in these sectors.”

Aircraft Leasing Companies 

According to a report by KPMG, 38 aircraft leasing companies have been registered in GIFT IFSC, which have leased 196 aircraft and 89 engines. Air India has completed India’s first Airbus A350-900 finance lease transaction. 

In addition, one of its subsidiaries secured a US$ 215 million loan to finance Boeing 777-300ER aircraft. IndiGo also completed India’s first JOLCO (Japanese Operating Lease with Call Option) transaction through GIFT City, which is considered a significant step for the Indian aviation sector.

In a report titled, “Advancing the Aircraft Leasing Ecosystem in India,” released in May 2026, Civil Aviation Secretary Sameer Kumar Sinha stated, “India’s civil aviation sector continues to demonstrate strong growth, driven by expanding connectivity, rising demand, and continuous policy-driven reforms.”

Challenges Persist 

Although India’s aviation sector is establishing a global presence in aircraft leasing and financing, several challenges remain. There is still heavy dependence on foreign lessors. 

Countries such as Ireland, Singapore, and Dubai already possess strong leasing ecosystems with stable tax policies and long-established investor confidence. 

Aircraft leasing requires substantial capital investment, but India still has limited deep capital markets and a shortage of long-term dollar funding. There is also a need for skilled human resources. Attracting international companies away from offshore hubs to India remains a major challenge.

Incentives For Aircraft Leasing

Incentives include a 15-year tax holiday; tax exemptions on lease payments; exemption from IGST and stamp duty; permission for transactions in foreign currencies; special protection under the Insolvency and Bankruptcy Code (IBC); and tax-friendly structure for global funding. 

Entry Of Aviation Companies

Air India’s AI Fleet Services IFSC Ltd plans to expand its portfolio from 50 aircraft to 76 aircraft by March 2027, while IndiGo’s Inter Globe Aviation Financial Services plans to increase its number from 75 to 150 aircraft. 

Akasa Air will establish “Akasa Air Leasing IFSC Private Limited (AALI)” in GIFT City, targeting leasing operations for 150 aircraft within two years. In addition, Star Air, through Ghodawat Aviation IFSC Pvt Ltd, will begin leasing Embraer E190 aircraft. At present, airlines collectively have pending deliveries of 1,630 aircraft.

Policy Decisions 

An IFSCA executive stated that India’s aircraft fleet will reach 1,100 aircraft by 2027 and exceed 2,250 aircraft by 2035. 

Over the next decade, India’s leasing ecosystem could present a US$ 50 billion opportunity. The central government has enacted the Protection of Interests in Aircraft Objects (PIAO) Act, 2025, aligning the legal framework with the Cape Town Convention. 

Recently, the government also approved a ₹5,000 crore Credit Line Guarantee Scheme, which is expected to reduce financial pressure on airlines.

Opportunities For Foreign Investors

Jurgen Westermeier, FICCI Civil Aviation Committee Chairman and Airbus India & South Asia President, said, “India’s aviation and aerospace sector continues to advance steadily on the foundations of safety, affordability, competitiveness, and sustainability. Considering the massive order backlog of Indian airlines and their financing requirements, enormous opportunities are emerging for domestic and foreign investors.”

Reforms In Union Budget

The reforms announced in the Union Budget 2026 are transforming GIFT IFSC from an India-focused leasing base into a competitive global aviation finance jurisdiction capable of hosting widebody leasing, engine-only platforms, and international airline portfolios. These reforms are expected to significantly enhance GIFT IFSC’s appeal among global capital providers.