IFSCA circular F. No. 172/IFSCA/Finance Company Regulations/2022-23/01 · 26 Feb 2025
Official title
Framework of Aircraft Lease updated as on February 26, 2025
Summary
Check the official recordThe International Financial Services Centres Authority provides a regulatory framework for entities to register as a Finance Company or Finance Unit to conduct aircraft leasing business in IFSCs. This framework covers operating and financial leases for aircraft, helicopters, engines, ground support equipment, and aviation training simulation devices. Entities must maintain minimum owned funds of USD 200,000 for operating leases or USD 3 million for financial leases. Lessors must operate in freely convertible foreign currency and comply with reporting, capital, and anti-money laundering requirements. The framework restricts certain asset acquisitions from persons resident in India, with specific exceptions for non-group entities, first-time imports, and domestic manufacturers. Applicants must register through the Single Window IT System.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
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F. No. 172/IFSCA/Finance Company Regulations/2022-23/01
May 18, 2022
(Updated as on February 26, 2025)
All Finance Company / Finance Unit registered in the International Financial Services Centres (IFSCs)
In exercise of the powers conferred by sub-clause (vi) of clause (d) of sub-section (1) of section 3 of the International Financial Services Centres Authority Act, 2019 (hereinafter referred to as ‘IFSCA Act’), the Government of India vide Gazette Notification number S.O. 3652(E) dated October 16, 2020, has notified aircraft lease, including operating and financial lease and any hybrid of operating and financial lease of aircraft or helicopter and engines of aircraft or helicopter or any other part thereof, as a ‘financial product’.
Further, in exercise of the above powers, the Government of India vide Gazette Notification number S.O.5199 (E) dated December 14, 2021, has notified operating lease, including any hybrid of operating and financial lease of such product or equipment as may be specified by International Financial Services Centres Authority, as a ‘financial product’.
In exercise of the powers drawn from the aforementioned notification, the International Financial Services Centres Authority (hereinafter referred to as ‘IFSCA’) has specified an operating lease, including an hybrid of operating and financial lease, in respect of the following equipment, as ‘financial product’1:
“(a) any piece of mobile equipment, whether or not powered or self-propelled, purpose designed, built and used for ground handling, servicing or field maintenance of aircraft on the ramp area of an airport and includes any piece of ground support equipment specified as such by IATA from time to time; and
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- (b) equipment used for providing services necessary for ramp handling including activities as specified in Schedule–I of the Notification number F. No. AAI/OPS/707/GHR-2018 dated 26th October, 2018 issued by Airports Authority of India, published in the Gazette of India, Extraordinary, Part III, Section 4, dated the 30th October, 2018, as amended from time to time.
Explanation: The aforementioned equipment shall collectively be referred to as the ‘Aircraft Ground Support Equipment’.”
- (c) Aviation training simulation devices2 shall include devices as may be permitted by the Authority.
3[As per sub-clause (g) of clause (iii) of sub-regulation (1) of regulation 5 of International Financial Services Centres Authority (Finance Company) Regulations, 2021 (hereinafter referred to as “Finance Company Regulations”) an operating lease transaction for aircraft lease is classified as a ‘permitted non-core activity’ and as per sub-clause (a) of clause (ii) of sub-regulation (1) of regulation 5 of the Finance Company Regulations a financial lease transaction for aircraft lease is classified as a ‘permitted core activity’ which includes a hybrid of financial lease and operating lease transaction for aircraft lease.]
The IFSCA, in order to facilitate setting up of the Aircraft Leasing business in the International Financial Services Centres (hereinafter referred to as “IFSCs”) and in exercise of the powers conferred under section 12, read with section 13 of the IFSCA Act, 2019, hereby specifies the following framework for entities to get registered under Finance Company Regulations as a ‘Finance Company’ or a ‘Finance Unit’ for undertaking aircraft lease transactions:
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This framework shall apply to all applicants desirous of seeking registration for one or more of the permissible activities specified under this Circular.
For the purpose of this Circular:
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compliant jurisdiction. In case the applicant is an LLP or a Trust, the partners or the trustees, as the case may be, shall also comply with this requirement.
Explanation: An applicant desirous of undertaking ‘Asset Management Support Services’ for an asset other than as mentioned at clause 5 (E) (iv)[^6] of this Circular shall obtain a separate authorisation under the framework for enabling ancillary services at IFSC (Circular F.No. 206/IFSCA/Anc.Aux/2020-21 dated February 10, 2021), issued by the IFSCA.
Notified vide Gazette Notification No. IFSCA/2022-23/GN/023- dated April 12, 2022, read with corrigendum No.IFSCA/2022-23/GN/023 dated April 27, 2022. ↩
Notified vide Gazette Notification No. IFSCA/2022-23/GN/037- dated April 11, 2023. ↩
Revised vide IFSCA (Finance Company) (Amendment) Regulations, 2022- dated July 01, 2022. Before revision it stood as under: “As per sub-clause (j) of clause (iii) of sub-regulation (1) of regulation 5 of International Financial Services Centers Authority (Finance Company) Regulations, 2021 (hereinafter referred to as “Finance Company Regulations”) an operating lease transaction for aircraft lease is classified as a ‘permitted non-core activity’ and as per sub-clause (d) of clause (ii) of sub-regulation (1) of regulation 5 of the Finance Company Regulations a financial lease transaction for aircraft lease is classified as a ‘permitted core activity’ which includes a hybrid of financial lease and operating lease transaction for aircraft lease.” ↩
Substituted vide Circular No 172/IFSCA/Finance Company Regulations/2022-23/003, dated April 26, 2023. Before substitution, it stood as under: “(ii) Lessor shall mean an entity registered with IFSCA as a Finance Company or a Finance Unit in accordance with Finance Company regulations and - a. engaged in the business of providing aircraft or helicopter and engines of aircraft or helicopter or any otherpart thereof and/or aircraft ground support equipment under an operating lease, financial lease and/or a hybridof financial and operating lease; b. any other related activity as may be specified by the Authority from time to time.” c. ↩
