INDIA Trends and Developments Contributed by: Ajay Kumar, Anchal Nanda and Hetram Bishnoi, KLA Legal
enforceable security rights, lenders will now be more willing to finance aircraft in India. By reducing the legal and financial risks for aircraft leasing companies, the Act will lead to lower leasing costs, which would have a trickle-down effect, resulting in lower fares for Indian flyers. India will now be a step closer to becoming eligible for OECD discounts. Reduced repossession risk translates into lower premiums, encouraging more favourable lease terms. In terms of efficient repossession and enforcement, creditors and lessors can recover aircraft faster in cas - es of default, thanks to remedies like deregistration and export rights, especially under “Alternative A”, which India adopted. This helps to avoid the lengthy court proceedings that are common in Indian insol - vency cases. Along with enhancing India’s credibility, the passage of the CTC Act also provides judicial clar - ity and a clearer legal roadmap for courts and tribunals handling aviation disputes. The CTC Act, along with positive changes in Indian regulations related to easing repossession by lessors in Gujarat International Finance Tec-City (“GIFT City”), will go a long way towards increasing investor confi - dence in the GIFT City as well. These developments will also pave the way for Indian and foreign leasing platforms for aircraft and engines to be established on Indian soil. Conclusion The CTC Act marks a transformative moment for India’s aviation and legal landscape. By bringing domestic law in line with the Cape Town Convention and Aircraft Protocol, the Act provides stronger, inter -
nationally recognised protections for aircraft lessors and financiers. This not only boosts investor confi - dence but also makes aircraft leasing in India more attractive and cost-effective. Both the Jet Airways and GoFirst cases underlined an urgent need for the Cape Town Convention in India, and the Act is now a positive sign, considering the uncertain geopolitical climate and the fact that an environment of uncertainty invariably affects all sectors, including aviation. By aligning with the Cape Town Convention and giv - ing precedence to international creditor rights, the Bill addresses long-standing concerns of aircraft lessors and lenders regarding asset security and reposses - sion in India. By adopting Alternative A under Article XI of the Aircraft Protocol and institutionalising remedies such as IDERA, India has sent a clear signal of its com - mitment to global best practices in aviation finance. These changes significantly enhance the creditworthi - ness of Indian aviation transactions, promote leasing activity through platforms like GIFT City, and position India as a jurisdiction of choice for aircraft leasing and financing. For India, the legislation represents more than just legal reform – it is a strategic move to position itself as a global aviation hub in line with jurisdictions such as Ireland. Its passage signals India’s commitment to creating a more predictable, transparent and creditor- friendly legal environment with streamlined reposses - sion rights, faster dispute resolution and reduced leas - ing risks. To fully realise its benefits, however, effective implementation and regulatory co-ordination will be critical. If executed well, the Act could significantly reshape the future of Indian aviation.
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