India has set its sights on becoming an aircraft financing and leasing hub to bolster its burgeoning aviation industry.
“As the world’s third largest domestic aviation market, the time is ripe for India to enter into aircraft financing and leasing activities from Indian shores,” finance minister Nirmala Sitharaman said in a budget speech presented on 5 July.
This is critical to developing a self-reliant aviation industry and creating attractive jobs in aviation finance, she added.
The goal is to make India an industry hub, underpinned by an earlier International Financial Services Centre bill that provides for the establishment of an authority to develop and regulate financial services market within special economic zones.
There are also plans to grow an ecosystem for MRO activities, and the government will “adopt suitable policy interventions” to encourage this. This draws upon India’s engineering strength to “achieve self-reliance in this vital aviation segment.”
In the background, New Delhi has plans to develop infrastructure at regional airports, and foreign investment rules in aviation may be eased. Divesting state-owned enterprises, in particular cash-strapped flag carrier Air India, is a priority.
“In view of current macro-economic parameters, government would not only reinitiate the process of strategic disinvestment of Air India, but would offer more (state-owned enterprises) for strategic participation by the private sector.”
Finance secretary Atanu Chakraborty told local media this could begin early August, within 15-20 days after the audited financial results become available mid-July.