The International Financial Services Centres Authority (IFSCA) on April 26, 2023, issued an amendment to IFSCA Circular titled ‘Framework for Aircraft Lease’ dated May 18, 2022, with reference to the Circular No. 172/IFSCA/Finance Company Regulations/2022-23/001 dated May 18, 2022.
After the Framework was released, the Authority received a number of requests from interested parties asking it to permit the leasing of aviation training simulation equipment as a permissible activity under the Framework because it is a crucial component of the aviation ecosystem.
Accordingly, the clauses Clause 5.B.(ii), 5. E and 5. H of the said Framework shall stand revised as follows:
• Clause 5.B.(ii) on definition of lessor:
“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 other part thereof and/or aircraft ground support equipment and/or aviation training simulation device under an operating lease, financial lease, and/or a hybrid of the financial and operating leases;
b. any other related activity as may be specified by the Authority from time to time.”
• Clause 5.E. on ‘Permissible Activities’ under Part I on Aircraft operating lease:
“A Lessor shall be permitted to undertake all or any of the following activities:
(i) Operating lease for an aircraft lease arrangement;
(ii) Operating lease for an aircraft ground support equipment;
(iii) Operating lease for an aviation training simulation device;
(iv) Asset Management Support Services for assets owned or leased out by the lessor or by any of its Group Entities set up in IFSCs in India;
Here the term ‘Group Entities’, shall mean an arrangement involving two or more entities related to each other through any of the following relationships, viz. Subsidiary – parent (defined in terms of AS 21), Joint venture (defined in terms of AS 27), Associate (defined in terms of AS 23), a related party (defined in terms of AS 18), Common brand name and investment in equity shares (of 20% and above).
(v) Sale and leaseback, purchase, novation, transfer, assignment, and such other similar transactions in relation to permitted activities specified in (i) to (iii) above, and;
(vi) any other related activity with the prior approval of the IFSCA.”
• Clause 5.H. on ‘Permissible Activities under financial lease’ under Part II on Aircraft financial lease:
“A Lessor shall be permitted to undertake all or any of the following activities:
(i) Financial lease or a hybrid of the financial and operating lease for an aircraft lease arrangement;
(ii) Financial lease or any hybrid of the financial and operating lease for an aircraft ground support equipment;
(iii) Financial lease or any hybrid of the financial and operating lease for an aircraft training simulation device;
(iv) Sale and leaseback, purchase, novation, transfer, assignment, and such other similar transactions in relation to permitted activities specified in (i) to (iii) above;
(v) Permitted activities as stated above in clause 5 (E) of this framework, and;
(vi) any other related activity with the prior approval of the IFSCA.”
[Circular No. 172/IFSCA/Finance Company Regulations/2022-23/003]
