International Financial Services Centres Authority (“IFSCA”), in exercise of powers conferred under Section 12 and Section 13 of the International Financial Services Centres Authority Act, 2019, vide Circular No. F. No. 172/IFSCA/Finance Company Regulations/2024-25/02[1] dated February 26, 2025, issued an amendment to the framework for aircraft lease with regard to transactions with person(s) resident in India (“Circular”).
This Circular is based on the International Financial Services Centres Authority (Finance Company) Regulations, 2021 (“FC Regulations”) and the ‘Framework for Aircraft Lease’ (“AL Framework”) issued under Circular No. 172/IFSCA/Finance Company Regulations/2022-23/01, dated May 18, 2022. Through this Circular, a key change has been made to Clause O.2 of the AL Framework, which governs transactions involving persons resident in India. The amended provisions now provide greater clarity on the conditions under which lessors can acquire assets covered by the AL Framework.
The key highlights of the Circular are as outlined below:
- Restrictions on Acquisition: Lessors shall be prohibited from purchasing, leasing, or acquiring assets under the AL Framework if, after acquisition, the asset shall be used solely by persons resident in India or to provide services to them. This aims to ensure that assets are not acquired with the intent of being used exclusively within India unless specific conditions are met.
- Exceptions to the Restrictions: The restrictions pertaining to the restrictions on acquisition, as outlined above shall not apply if:
- the acquisition is made from a person who is not a ‘Group Entity’ of the lessor; or
- the acquisition forms part of a sale and leaseback arrangement involving assets being imported into India for the first time; or
- the asset is directly acquired from an Indian manufacturer.
These exceptions are designed to offer more flexibility, allowing lessors in the International Financial Services Centre (IFSC) to engage in transactions which involve Indian manufacturers or certain leasing arrangements that support the entry of assets into the Indian market.
[1]https://ifsca.gov.in/Viewer?Path=Document%2FLegal%2Famendatory-circular-aircraft-lease-26-02-2025final26022025114948.pdf&Title=Amendment%20to%20the%20%E2%80%98Framework%20for%20Aircraft%20Lease%E2%80%99%20with%20regard%20to%20transactions%20with%20person%20%28s%29%20resident%20in%20India.&Date=26%2F02%2F2025