Aircraft Leasing In GIFT CITY IFSC
Global Overview:
Aircraft leasing can be traced back to the early days of aviation, but it gained prominence in the 1960s and 1970s. During this period, leasing was primarily used by airlines to acquire aircraft without having to make a substantial upfront capital investment.
The 1980s saw a significant expansion in aircraft leasing, driven by factors such as deregulation in the airline industry and the need for more cost effective ways to acquire aircraft. Operating leases became a popular choice, allowing airlines to lease aircraft for a specific period without the financial commitment of ownership.
The 21st century saw increased competition among leasing companies. New players entered the market, and existing lessors expanded their fleets to meet the growing demand for leased aircraft. As of my knowledge cutoff in January 2022, the aircraft leasing industry continues to be a dynamic and essential part of the aviation ecosystem, providing airlines with the flexibility to manage their fleets strategically
Aircraft Leasing History in India:
In the early years of aviation in India, airlines typically acquired aircraft through outright purchases. Leasing was not as common, and the industry relied more on traditional ownership models. The liberalization of the Indian economy in the early 1990s marked a significant turning point. The civil aviation sector saw reforms, and private airlines entered the market.
Indian carriers collaborated with international lessors to lease a variety of aircraft, from narrow-body to wide-body, depending on their operational requirements and route networks.
Types of Lease:
1.Operating Lease:
A. Permissible Activities under operating lease:
A lessor in IFSCs shall be permitted to undertake all or any of the following activities:
- Operating lease for an aircraft lease arrangement;
- Operating lease for an aircraft ground support equipment;
- Operating lease for an aviation training simulation device.
- Asset Management Support Services for assets owned or leased out by the entity or by any of its Group Entities set up in IFSCs in India;
- (v)Sale and lease back, purchase, novation, transfer, assignment, and such other similar transactions in relation to permitted activities specified in (i) to (iii) above
- (vi)any other related activity with the prior approval of the IFSCA
B. Capital Requirement:
A minimum owned fund of USD 200,000 or its equivalent in freely convertible foreign currency, is to be maintained at all times by the entity.
2. Financial Lease:
A. Permissible Activities under Financial lease:
A lessor in IFSCs shall be permitted to undertake all or any of the following activities:
- Financial lease or a hybrid of financial and operating lease for an aircraft lease arrangement;
- Financial lease or any hybrid of financial and operating lease for an aircraft ground support equipment;
- Financial lease or any hybrid of financial and operating lease for an aviation training simulation device;
- Sale and lease back, purchase, novation, transfer, assignment, and such other similar transactions in relation to permitted activities specified in (i) to (iii) above.
- any other related activity with the prior approval of the IFSCA
B. Capital Requirement:
A minimum owned fund of USD 3 million or its equivalent in freely convertible foreign currency, is to be maintained at all times by the entity.
Other Regulatory Regime:
A. Mode Of Conducting Business :
Aircraft leasing entity can be set up as a company or LLP or a trust or any other form as may be specified by the IFSCA (Explanation: The branch set up in IFSC may also be of a wholly owned subsidiary (including a subsidiary incorporated outside IFSC) of the IFSC registered entity, for the purpose)
B.CURRENCY
All transactions undertaken by a Lessor shall be in freely convertible foreign currency only. However, the Lessor may defray their administrative expenses in INR by maintaining a separate INR account
C. Maintenance of Books of Accounts, Records and Documents
The books of accounts and their financial information shall be maintained in any freely convertible currency
D. Submissions of Report / Information :
The lessor shall furnish the following information to the IFSCA within 15 days from the finalization of annual financial statements:
a. Audited Annual financial statements.
b. Confirmation of compliance with the applicable regulations, circulars, guidelines and directions issued by the IFSCA.
c. Confirmation of compliance with capital requirement and details thereof.
d. Details of material regulatory action, if any, against the Promoters, Key Managerial Persons or persons controlling the lessor.
Time Line:
Steps
Activity
Approx. Timeline
1
Apply for reserving name of new company with ROC
5 working days from the date of application
2
PLOA and NOC from GIFT City
10 working days
3
ROC Process for incorporation
15 working days
4
Application to SEZ & IFSC Authority
30 working days from the date of application
5
Letter of Approval (LOA) Acceptance letter, after issuance of LOA
Unit has to confirm acceptance of LOA terms & condition to the
Development Commissioner within 30 days of issuance of Letter of Approval
from DC Office
6
Bank Account opening
immediately after Receiving LOA
7
Registration with SEZ webportal
Registration required within 20 days after issuance of LOA
8
Bond cum Legal undertaking
Bond cum legal Undertaking required within 30 days from Letter of
approval date.
9
Obtain GST Registration, RCME,IEC registration
Registration required within 20 days after issuance of LOA
10
The approved Units shall have to execute lease deed/Leave and License
with the Developer or Co –developer as the case may be for the allotted space
according to terms and condition on which the PLOA was issued
(Minimum-30 days after receiving eligibility certificate form SEZ)
11
Obtaining approval from financial services regulator &
commencement of business
File form INC-20A with ROC with in 180 Days form date of incorporation
Approx. time
90 working days
A minimum owned fund of USD 200,000 or its equivalent in freely convertible foreign currency, is to be maintained at all times by the entity.
2. Financial Lease:
A. Permissible Activities under Financial lease:
A lessor in IFSCs shall be permitted to undertake all or any of the following activities:
- Financial lease or a hybrid of financial and operating lease for an aircraft lease arrangement;
- Financial lease or any hybrid of financial and operating lease for an aircraft ground support equipment;
- Financial lease or any hybrid of financial and operating lease for an aviation training simulation device;
- Sale and lease back, purchase, novation, transfer, assignment, and such other similar transactions in relation to permitted activities specified in (i) to (iii) above.
- any other related activity with the prior approval of the IFSCA
B. Capital Requirement:
Other Regulatory Regime:
A. Mode Of Conducting Business :
Aircraft leasing entity can be set up as a company or LLP or a trust or any other form as may be specified by the IFSCA (Explanation: The branch set up in IFSC may also be of a wholly owned subsidiary (including a subsidiary incorporated outside IFSC) of the IFSC registered entity, for the purpose)
B.CURRENCY
All transactions undertaken by a Lessor shall be in freely convertible foreign currency only. However, the Lessor may defray their administrative expenses in INR by maintaining a separate INR account
C. Maintenance of Books of Accounts, Records and Documents
The books of accounts and their financial information shall be maintained in any freely convertible currency
D. Submissions of Report / Information :
The lessor shall furnish the following information to the IFSCA within 15 days from the finalization of annual financial statements:
a. Audited Annual financial statements.
b. Confirmation of compliance with the applicable regulations, circulars, guidelines and directions issued by the IFSCA.
c. Confirmation of compliance with capital requirement and details thereof.
d. Details of material regulatory action, if any, against the Promoters, Key Managerial Persons or persons controlling the lessor.
Time Line:
|
Steps |
Activity |
Approx. Timeline |
|
1 |
Apply for reserving name of new company with ROC |
5 working days from the date of application |
|
2 |
PLOA and NOC from GIFT City |
10 working days |
|
3 |
ROC Process for incorporation |
15 working days |
|
4 |
Application to SEZ & IFSC Authority |
30 working days from the date of application |
|
5 |
Letter of Approval (LOA) Acceptance letter, after issuance of LOA |
Unit has to confirm acceptance of LOA terms & condition to the Development Commissioner within 30 days of issuance of Letter of Approval |
|
6 |
Bank Account opening |
immediately after Receiving LOA |
|
7 |
Registration with SEZ webportal |
Registration required within 20 days after issuance of LOA |
|
8 |
Bond cum Legal undertaking |
Bond cum legal Undertaking required within 30 days from Letter of approval date. |
|
9 |
Obtain GST Registration, RCME,IEC registration |
Registration required within 20 days after issuance of LOA |
|
10 |
The approved Units shall have to execute lease deed/Leave and License with the Developer or Co –developer as the case may be for the allotted space |
according to terms and condition on which the PLOA was issued (Minimum-30 days after receiving eligibility certificate form SEZ) |
|
11 |
Obtaining approval from financial services regulator & commencement of business |
File form INC-20A with ROC with in 180 Days form date of incorporation |
|
Approx. time |
90 working days |
