- Why in news
- On 2 September 2026, Civil Aviation Minister Ram Mohan Naidu chaired the first meeting of the High-Level Committee on Aircraft Leasing and Financing. It took up tax, regulatory and financing hurdles to building an Indian leasing ecosystem.
- What it is
- The Protection of Interests in Aircraft Objects Act is India's law giving effect to the Cape Town Convention on international interests in mobile equipment, with its Aircraft Protocol. The Convention protects lessors and financiers by setting common rules on registering interests in aircraft and engines and on recovering them on default. This lowers risk for lessors and so cuts the cost of leasing aircraft to Indian airlines.
- Committee
- The High-Level Committee on Aircraft Leasing and Financing met for the first time under the Civil Aviation Minister. It was formed after an industry suggestion at the second Aircraft Leasing Summit.
- Legal link
- Industry sought ratification of the Cape Town Convention at the first Aircraft Leasing Summit in GIFT City. The government answered by enacting the Protection of Interests in Aircraft Objects Act.
- IFSC leasing
- 422 assets, including 250 aircraft and 87 engines, have been leased through IFSC, with 474 leasing agreements signed.
- Leased fleet
- More than 85% of the fleet of Indian carriers is leased, which makes leasing central to aviation growth.
- Issues taken up
- Discussions covered rupee-denominated financing, clarity on GAAR, and renegotiating the Double Taxation Avoidance Agreement with Ireland.
Don’t confuse with Cape Town Convention vs Chicago Convention: The Cape Town Convention deals with security interests in mobile equipment such as aircraft. The Chicago Convention (1944) governs international civil aviation and set up ICAO.
Don’t confuse with IFSCA vs DGCA: IFSCA regulates financial services in IFSCs such as GIFT City, including aircraft leasing. DGCA is the aviation safety regulator.
Laws, judgments and statutory bodies: 30 Prelims questions since 2013 (what the law says, who chairs, legal basis). In Mains, 44 news-triggered questions, most in GS2, asking for provisions and challenges.
Why it matters
- Easier leasing lowers airline capital costs and helps fleet expansion, since aircraft supply is a bottleneck.
- Building a leasing hub in GIFT City can keep lessor business and fee income in India.
Problems
- Tax uncertainty, such as GAAR applicability and treaty terms, deters lessors.
- Limited bank credit and the lack of rupee financing raise costs for the aircraft sector.
Way forward
- Follow a time-bound plan, consulting the Ministries concerned, to settle tax, regulatory and financing issues.
- Expand bank credit to aircraft and build skills through joint ventures in leasing.
Put in your answer
Leased fleet share: More than 85% of Indian carriers' fleet is leased, showing dependence on lessors.
IFSC leasing results: 422 assets have been leased through IFSC, which shows early results from the push.
- 2014Mains GS3 · Q17Airspace sovereignty under international civil aviation laws, and challenges posed
- 2024Mains GS3 · Q12Need for regional air connectivity and UDAN scheme achievements
- 2026Prelims Q96Aviation hull insurance coverage and Montreal Convention passenger compensation liability statements
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
No practice question for this one; the card may still help an answer. Why: New committee, plus Cape Town Convention law link; it is a first meeting with little to test, so a card only.
Worth revising until Prelims 2028: most news questions come within two years of the event.