India does not have any specific domestic legislation with respect to the leasing and financing of aircrafts. Though the principal legislations governing the sector are the Aircraft Act, 1934 and the Aircraft Rules, 1937, leasing and financing is also governed by a combination of pre-existing rules and regulations on contracts, foreign exchange, etc. Since aircraft leasing can result in complex safety situations depending on the involvement of multiple jurisdictions – separate contracting state and India as the place of operation - in order for the organisation providing the aircraft, the operator and the regulatory authorities, the Directorate General of Civil Aviation (DGCA) released the Aircraft Leasing Manual in 2013, which was revised in 2017 to prescribe policy and guidelines regarding the management of an aircraft lease to ensure the regulatory obligations are met and that operational safety is not compromised by the conditions of the lease.

Aircraft leasing options range from obtaining either a wet lease, a dry lease or a damp lease. In a wet lease, the essential ACMI (Aircraft, Crew, Maintenance and Insurance) are also leased along with the aircraft. A dry lease does not include crew, maintenance or insurance. Finally, in a damp lease, the aircraft is leased along with the maintenance and insurance, but aircraft crew is not leased. The aircraft register in India is maintained by the DGCA. This register contains details in relation to the aircraft such as the type of aircraft, the year of manufacture, the full name and address of the owner or lessor, and the full name and address of the operator or lessee. The DGCA issues the certificate of registration for the aircraft. There is no separate engine certificate of registration in India.1 Title in an aircraft can be transferred by execution of a sale agreement or a bill of sale between the seller and the buyer of the aircraft.

Under Chapter 7 of the DGCA Aircraft Leasing Manual, the parties to the lease agreement are mandated to make an application for approval in writing together with detailed description of the party(s) responsible for the operational control and continuing airworthiness for the aircraft in the lease arrangement. DGCA may further require supplementary documents to determine the airworthiness and operations under the lease agreement. Paragraph 9.1 of the DGCA Aircraft Leasing Manual provides that once an application is made to the Air Transport Directorate of DGCA, it may convene a meeting with the Indian operator for finalising the arrangements and modalities for operation of the leased aircraft during the period of lease. The representatives of foreign operator as well as the foreign regulatory authority may also be allowed to participate in the meeting. The DGCA shall take a decision regarding desirability of conclusion of an agreement under Article 83 bis2 subject to the provisions and the requirements contained in chapter 7. The lessor, on his part, has to give an undertaking in the lease agreement that he will comply with all the applicable CAR rules. The DGCA can withdraw permission for operation of a particular aircraft in India under lease agreement if during service it is found that safety of the aircraft operations is in doubt or CAR requirements or any other safety rules are not being complied with.3

Pursuant to the DGCA permission, the Indian operator can conclude a formal lease agreement with the lessor. The agreement should include the conditions decided by the State of Registry and the State of Operator and the ones imposed by the DGCA. A copy of the lease agreement has to be, thereafter, filed with the DGCA at New Delhi (the DGCA usually asks for a notarized copy from the airlines). The copy of the lease agreement does not attract stamp duty in the State of Delhi but it is necessary to stamp the lease agreement in the relevant state, (the state in which the airline is incorporated or has its operational base), prior to filing with the DGCA. Stamping is necessary to ensure that the lease agreement is enforceable in a court of law. In India, the stamp duty rates vary from state to state.4 The applicant shall submit to DGCA (Air Transport Directorate) the completed three sets of Aircraft Leasing Form, and a copy of the lease agreement, at least 45 days prior to the proposed date of commencement of operations.5

The Ministry of Civil Aviation constituted a working report in 2019 and published a report titled 'Project Rupee Raftaar' with the aim of addressing possible avenues for aircraft financing and leasing activities and setting out a road map for developing this industry. The report further made several recommendations on attracting leasing businesses in the Gujarat International Finance Tec-City (GIFT City) International Finance Services Centre (IFSC).

The IFSC has been set up under the Special Economic Zone (SEZ) route with the objective of unlocking India's potential in the international financial services space. The IFSC will help in onshoring the financial services and transactions which are carried out offshore by Indian corporate entities and overseas branches of financial institutions in the financial service centres of Singapore and Hong Kong. Under the Indian legal and regulatory regime, the IFSC will be treated as a pseudo foreign territory dealing in foreign currency and will be recognised as a non-resident entity under the RBI regulations.

Indian authorities have recognised that most aircrafts which are operating in India have been leased from entities in Ireland. The authorities have also noted developments in foreign jurisdictions such as China where the domestic banks are successfully promoting international leasing companies. In an attempt to capture a piece of this pie, several legislative steps have been taken by the government:

  1. Establishment of IFSCA: The International Financial Services Centres Authority Act (IFSCA Act) 2019 authorises the International Financial Services Centres Authority (IFSCA) as a unified regulator, with representation from India's main regulators like RBI, SEBI, Insurance and Regulatory Development Authority (IRDA) Pension Fund and Regulatory and Development Authority (PFRDA), and the government on its decision-making bodies. The IFSCA was established with a view to simplify the regulatory approach since businesses outside the GIFT City are subject to a plethora of rules and regulations.
  2. Designation of "aircraft lease" as a "financial product": The Ministry of Finance, vide a notification dated October 16, 2020 designated an "aircraft lease" as a "financial product" under the IFSCA Act 2019.6 An "aircraft lease" includes operating and finance leases and any hybrid of operating and finance leases of an aircraft or helicopter and their engines.
  3. Initiatives by IFSCA: IFSCA, in an attempt to facilitate the set-up of aircraft leasing businesses in the IFSC has provided a framework (Framework) for enabling aircraft operating leases on February 19, 2021.7 The IFSCA (Banking) Regulations 2020, has also permitted IFSC banking units to undertake equipment leasing, including aircraft leasing. The IFSCA has also proposed to introduce the IFSCA (Finance Company) Regulations 2021 for enabling finance leasing from the IFSC.
  4. Eligibility to set up operations in GIFT City: Under the Framework, in order to set up operations in IFSC, the aircraft lessor must register with the IFSCA and satisfy the following conditions: (i) the entity shall set up operations in an IFSC in India by way of a company, limited liability partnership, a trust or in any other form as may be specified by the IFSCA; (ii) the person(s) in control of the aforesaid entity shall be located in a Financial Action Task Force (FATF) compliant jurisdiction; (iii) the entity shall deploy resources in the IFSC commensurate with the business operations under the framework; (iv) the entity must meet a minimum capital requirement of USD 200,000 or equivalent in freely convertible foreign currency; (v) the lessor is only permitted to transact in a foreign currency; however the lessor may defray its administrative expenses in INR by maintaining a separate INR account.
  5. Tax Benefits in GIFT City: Lessors that set up their operations in the GIFT City can avail the following tax benefits: (i) a tax holiday (for 10 consecutive years out of 15 years); (ii) no Capital Gain Tax on disposal of an aircraft during the tax holiday period; (iii) no withholding tax on aircraft lease payments in the nature of royalties paid to non-residents; (iv) no withholding tax on interest payable to a non-resident by an IFSC lessor on overseas borrowings; (v) no dividend distribution tax-shareholders will pay tax as per their local regime; (vi) no basic custom duty and stamp duty; (vii) GST rates are equivalent to the Irish Regime. These exemptions are only available to those lessors who commence their operations on or before March 31, 2024.


Leasing an aircraft comes with its own set of advantages. Since there is no capital investment in buying an aircraft, the freed-up capital helps in ensuring a better cash flow for the airline. Leasing also provides an option to the airlines to increase or decrease its capacity on a short notice, and to offer a price advantage to the customers via the available capital. Being a highly attractive financing avenue for the banks, airlines looking to lease aircrafts always have cost effective financing offers at their disposal. The Indian government has taken substantial steps in the right direction to bring the Indian leasing sector at par with its global competitors. The regulatory overhaul of the existing regime will be helpful in imbuing confidence in the stakeholders and shall make India a highly attractive destination for leasing businesses. However, the government must bring in more clarity with respect to issues such as the repossessing mechanism of the aircraft in case the lessee defaults, governing law of domestic leases, etc. As and when these issues are resolved, the GIFT City shall prove to be a highly sought-after business centre.


1. Chapter 7, Aircraft Leasing Manual 2013 (Revised in 2017).

2. Article 83 bis to the Chicago Convention imposes essential safety oversight responsibilities. Any aircraft transfer made under the said provision is to be recognised by all states which have ratified Article 83 bis. The transfer of responsibility involves functions and duties under, various provisions of the Chicago Convention pertaining to the rules of the air, radio licensing, certificates of airworthiness, and personnel licences, respectively.

3. Chapter 7, Aircraft Leasing Manual 2013 (Revised in 2017).

4. ibid.

5. ibid.

6. The notification can be accessed here

7. IFSCA, Framework for Aircraft Operating Lease, 2021 (can be accessed at

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.