India’s New Bill Boosts Aircraft Leasing
India’s parliament has taken a significant step to transform the aviation leasing landscape by passing the Protection of Interests in Aircraft Objects Bill (2025), a piece of legislation that gives full legal effect to the Cape Town Convention. The Rajya Sabha, the upper house of parliament, approved the bill on April 1, 2025, marking a milestone in modernizing the country’s aviation finance sector. Aviation minister Kinjarapu Rammohan Naidu stressed that the new law would offer enhanced security to aircraft and engine lessors, ultimately helping to reduce leasing costs and encourage more investments in the industry.
In his address to the upper chamber, Naidu emphasized that the legislation is aimed at providing much-needed clarity to the leasing industry, which is vital for a sector where domestic operators lease over 86% of their fleets. Despite India signing the Cape Town Convention in 2008—a treaty designed to establish uniform leasing rights and obligations for high-value movable assets such as aircraft and engines—the country had not previously implemented domestic laws to enforce the convention. This lack of legal backing has long posed challenges for lessors, who have struggled to reclaim aircraft and engines from carriers facing financial difficulties, as seen in recent cases involving airlines like Go First and SpiceJet.
The new bill is designed to address these issues head-on by giving full legal force to both the Cape Town Convention and its accompanying protocol within India. One of the key features of the legislation is that it empowers creditors and lessors to repossess aircraft within two months of a default, or according to the terms agreed upon by the parties involved. This change is expected to boost confidence among international financiers and leasing companies, making it easier for them to secure assets in the event of non-payment or other contractual breaches.
Additionally, the bill mandates that India’s Directorate General of Civil Aviation (DGCA) maintain a comprehensive registry of aircraft interests and dues. By requiring creditors and lessors to keep the DGCA informed of their local leasing activities, the government aims to create a transparent framework that will streamline dispute resolution and enforce leasing agreements more effectively. This measure is anticipated to not only protect the rights of lessors but also improve the overall efficiency of the aviation sector in India.
Naidu was unequivocal about the positive impact the new law is expected to have on the country’s aviation industry. He stated that by giving legal backing to the Cape Town Convention and Protocol, the bill will change the aviation landscape in India, making it a more attractive destination for global lessors and financial institutions. This legislative move is seen as a critical element in the government’s broader strategy to modernize the aviation sector, drive down operating costs, and promote robust growth.
Industry experts view the passage of the bill as a welcome development that will instill greater confidence in the Indian market. With improved legal certainty, lessors can better manage their risk exposures, while airlines may benefit from more favorable leasing terms. The legislation is also expected to attract increased foreign investment into the Indian aviation sector, thereby enhancing the competitiveness of local carriers on the international stage. Ultimately, the Protection of Interests in Aircraft Objects Bill (2025) is set to pave the way for a more secure and efficient leasing environment, benefiting both the industry and its customers as India continues to expand its aviation footprint.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com