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After Air India, IndiGo plans to set up shop at IFS Gift City to financially lease aircraft. The company said it aims to invest ₹30 crore.
The company said that this company will be set up subject to approvals. “Issuing corporate guarantees of up to $996 million (or an equivalent amount in Indian rupees or any other currency) to secure the payment obligations of the aforesaid wholly-owned subsidiaries.” The company further added that this will be a wholly-owned subsidiary in Gift City, Gujarat, which is being developed as a global financial services hub by the Government of India.
“Investment of up to ₹30 crore in one or more tranches through equity, quasi-equity, optionally convertible preference shares, optionally convertible debt instruments, or any combination thereof,” the company said.
Order book
IndiGo has an order book of close to 970 aircraft. The company informed the exchanges. “Order for additional 10 A320 NEO family aircraft. This will be a part of the 300 aircraft order for 2019,” the company said. Both Airbus and IndiGo have yet to sign the agreement.
Currently, the lion’s share of global aircraft leasing is done through Ireland and China. India hopes to get a piece of it through IFSC. In February 2021, the International Financial Services Centre Authority (IFSCA) issued a framework for aircraft leasing in India.
Incentives galore
Taking learnings from Dublin, IFSC Gift City provides several incentives, including tax benefits for 10 years from business profits, no capital gain tax, no stamp duty, and no GST on transactions carried out through the entity, among others. The government has been trying to get aviation players to set up shop at Gift City for the past two and a half years.
businessline had reported that Air India was the first commercial airline to set up a leasing unit at IFSC Gift City in Gujarat. The airline’s six A350s, which are slated to be inducted into the Tata-owned airline’s fleet, will come through the said leasing firm, AI Fleet Services IFSC Ltd under a financial lease, said sources. The estimated project cost is ₹7,253 crore.
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