Vital to develop this new line of business, says Minister
India has created a highly effective system for aircraft leasing and financing which is comparable to that of Ireland, China, HongKong, Singapore and elsewhere.
The purpose is to grow India’s financing market which is critical to the development of aviation industry, creating high aspirational jobs in the sector and in turn propelling India’s growth, said Minister of State for Civil Aviation Hardeep Singh Puri.
The initiative has the potential to deliver following key benefits:
Develop new line of business in India for International Financial Services
Create additional high-end jobs opportunity in India
Retain International Financial Services business in India and general additional business for Banks, NBFCs, Credit Guarantors, Insurance companies, other ancillary business etc.
Add India on the map of global financial centres for International financial services
Generate additional revenues through collection of taxes from ancillary industries and eventually through aircraft financing
Bring various Foreign lessors in India
Reduce foreign exchange outflow
Foster an aviation financing system that supports financing of airport development as well as the Make-in India initiative for manufacturing of aircraft, helicopters, drones, air taxis etc, beside component and parts suppliers for manufacturing of carriers as also global OEMs.
Further, Puri also wants to leverage on India’s growing air traffic to establish a robust aircraft leasing industry, which would finance new aircraft deliveries through its own policies and products.
Addressing the ‘India Aircraft Leasing Summit 2021 – Rupee Raftaar’ on 26 Feb 2021, Puri said that it is vital to develop this new line of business in India for financial services and add India on the map of global financial centers for international financial services.
Puri said that the COVID-19 pandemic has stagnated the economic activities globally, but Indian aviation sector, has shown resilience, recalibration and resurgence despite the cascading impact of various aspects of world trade.
He added that the Indian Aviation sector is on a path to recovery and has exhibited significant recovery to pre-Covid levels in terms of passenger movement and cargo operation. Concerted efforts are being made to attract new business into India, such as through aircraft leasing, financing, and MRO operations.
To commensurate with the growth potential of Indian aviation sector, in the next 20 years, India will need 1,750-2,100 aircraft valued at over Rs.2,040,000 crore (~US$290 billion), with an estimated 100 deliveries each year, i.e. about Rs.35,000 crore or US$5 billion of financing each year as per predictions of Airbus and Boeing.
Minister highlighted that aircraft financing is the most profitable segment of the aviation value chain and currently, foreign financiers and lessors are the biggest beneficiaries of India’s growing opportunity. He informed that several initiatives have been taken by the Government to develop Aviation leasing and Financing Hub in India which included Financing, MRO, manufacturing among others to rapidly expand this business in India.
Puri shared that the Rupee Raftaar working group on aircraft leasing and financing, therefore, has holistically taken the 360 degree review of existing and foreseeable barriers to Aircraft Financing by local Indian financiers in India after extensive consultations with RBI, Banks, NBFCs – Asset financing and leasing companies, Airlines, Airports public and Private corporations and other stakeholders.
The Report of the Working Group on Project Rupee Raftaar on Developing Avenues for Aircraft Financing and Leasing in India was released at Global Aviation Summit 2019 in Mumbai. #investment #banking #financing #leasing #civilaviation #aircraft /fiinews.com
