Two years after the Union Budget made aircraft leasing from Gujarat International Finance Tec-City (GIFT) eligible for massive tax breaks, the business seems to have barely taken off.
The government wanted the aviation sector to grow and aircraft leasing was among the reform measures. It was hoped that Indian carriers would step up on domestic demand through the leasing platform at GIFT City.
Owners of aircraft leasing companies cite a lack of understanding among customs officials when a jet is imported by a GIFT-based entity, a lack of interest from banks to offer finance, and infrastructure constraints as reasons for their failure.
In 2021, the first plane was leased by JetSetGo, one of the several aircraft leasing companies that set up shop at GIFT. No other aircraft, except a chopper, has been leased to date. Even the state-owned Pawan Hans, decided to do so from an Ireland-based company instead.
Even Jet Airways, which is aiming to replenish its fleet in preparation for a comeback, has allegedly stated that leasing jets from GIFT is more expensive than leasing planes from offshore destinations.
Under the International Financial Services Centres Authority Act (IFSCA), the government declared aircraft leasing a financial product in October 2020. In consequence, any corporation operating an airplane leasing business out of Gujarat’s GIFT City was entitled to: GST and customs duty exemptions; a 10-year tax holiday; and a lower minimal alternative tax (MAT) of 9% instead of 15%.