Boon For IndiGo, SpiceJet and Co In Nirmala Sitharaman’s Budget

NEW DELHI: Narendra Modi’s administration plans to make India a hub for aircraft and leasing aircraft, as the South Asian nation moves to support local carriers, which are among the largest buyers for Airbus SE and Boeing Co.
“As the third largest domestic airline in the world, it’s time for India to get into the financing of aircraft and leasing from the Indian coasts,” Finance Minister Nirmala Sitharaman said in his budget speech. “This is crucial to the development of aviation industry that relies on self-confidence, creating aspiration jobs in air finance, apart from using the business opportunities available in Indian financial special economic zones.”
The possibility of buying and renting aircraft at the local level will be a boon to domestic carriers, such as IndiGo and SpiceJet Ltd. from InterGlobe Aviation Ltd., as they will significantly isolate them from foreign exchange fluctuations. Airlines are increasingly moving toward a model of light assets, according to which they sell aircraft to renters for profit, just to get them back, which helps them keep the younger fleet.
The Center will also look at the relaxed rules of foreign direct investment in the aviation sector, Ms Sitharaman said, without specifying details. Indian laws now allow foreign airlines to take up a maximum of 49% of shares in local carriers, preventing them from taking effective control and ownership of the local company.

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