India’s Protection of Interests in Aircraft Objects Bill: A Game-Changer for Aviation Growth and Investment
The Protection of Interests in Aircraft Objects Bill, introduced in February 2025, aims to enhance India’s aviation industry by addressing legal issues with the Cape Town Convention, which has hindered access to international financial markets. The Bill ensures that the Convention will take precedence over Indian law, boosting investor confidence. The Aviation Working Group (AWG) has been instrumental in the Bill’s progress and will continue to support its implementation.
The Bill is expected to attract more investors, including those interested in JOLCO deals and Enhanced Equipment Trust Certificates (EETCs). It could also reduce financing costs by qualifying India for discounts under the Aircraft Sector Understanding (ASU). Alongside legal reforms, India is advancing aviation infrastructure, including new airports and services, positioning itself for significant growth in the global aviation market.
India’s Protection of Interests in Aircraft Objects Bill: A Game-Changer for Aviation Growth and Investment
In February 2025, India’s government proposed a new law called the Protection of Interests in Aircraft Objects Bill to strengthen the country’s aviation sector. This move is seen as a game-changer because Indian airlines have long faced challenges in borrowing money from global investors. The main issue? India’s legal system hasn’t fully recognized the Cape Town Convention—an international treaty that protects lenders’ rights to repossess aircraft if airlines fail to repay loans. Without proper enforcement of this treaty, foreign investors hesitated to fund Indian carriers. The new Bill aims to fix this by making the Cape Town Convention legally binding in India, overriding conflicting local laws. This should boost investor confidence and help airlines secure funds for growth.
The global aviation industry has praised the Bill, calling it vital for India’s aviation expansion. The Aviation Working Group (AWG), a global watchdog for aviation finance, helped draft the legislation and will monitor its implementation. The need for such a law became urgent after Indian airlines like GoFirst collapsed in recent years, leaving investors unprotected during bankruptcy proceedings. By prioritizing international agreements over domestic laws, the Bill ensures lenders can reclaim aircraft quickly if an airline goes bankrupt, reducing financial risks.
India’s aircraft leasing market has grown in recent years, with “leaseback” deals—where airlines sell planes to lessors and lease them back—becoming a popular way to raise funds. However, more complex financing options, like Japanese Operating Lease with Call Option (JOLCO) deals, have been slow to take off in India due to legal uncertainties. The Bill is expected to attract investors interested in such arrangements. It could also pave the way for Enhanced Equipment Trust Certificates (EETCs), a type of bond backed by aircraft assets. These tools would let airlines borrow money at lower rates, as investors gain confidence in India’s legal framework.
Additionally, the Bill may help airlines qualify for cheaper loans through export credit programs. Under global rules like the Aircraft Sector Understanding (ASU), countries that enforce the Cape Town Convention get discounts on the minimum down payment required for aircraft purchases. With the new law, Indian carriers could save millions on financing costs, making it easier to buy planes or upgrade fleets.
This legal overhaul comes alongside India’s broader push to modernize its aviation industry. For example, Air India’s privatization in recent years and massive aircraft orders by carriers like IndiGo and Air India reflect the sector’s growth. The government has also promoted GIFT City (Gujarat International Finance Tec-City) as a hub for aircraft leasing, offering tax breaks and simpler regulations to attract global firms.
Infrastructure upgrades are another focus. A new airport in Delhi and revamped terminals in cities like Mumbai and Bengaluru aim to handle rising passenger traffic. Bengaluru’s airport even boasts a world-class lounge, signaling India’s ambition to compete with global aviation hubs. These developments, combined with the new Bill, position India to become a major player in global aviation.
In summary, the Protection of Interests in Aircraft Objects Bill addresses long-standing legal hurdles that held back India’s aviation sector. By aligning with global standards, it reassures investors, unlocks new funding options, and supports the industry’s rapid growth. With better laws, upgraded infrastructure, and bold investments, India is ready to soar in the competitive aviation market.