For aircraft lessors, the real risk lies in recovering an aircraft when an airline defaults. India’s insolvency proceedings between May 2023 and April 2024 exposed the conflict between aircraft repossession rights and the IBC moratorium, reshaping the legal framework for aircraft leasing insolvency in India. These developments are particularly relevant to lessors operating from GIFT IFSC and leasing aircraft to Indian operators.

The Collision

Section 14(1) of the Insolvency and Bankruptcy Code, 2016 declares a moratorium on the insolvency commencement date. Clause (d) prohibits “the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor”. On its face, that captures a leased aircraft.

Against it stands rule 30(7) of the Aircraft Rules, 1937, which implements Article XIII of the Cape Town Protocol. On an application supported by an irrevocable deregistration and export request authorisation (IDERA) and a priority search report, the registration of the aircraft shall be cancelled within five working days, without reference to the operator.

When Go Airlines (India) Limited entered insolvency on 10 May 2023, the DGCA declined to process lessors’ deregistration applications, citing the moratorium. Fifty-four aircraft were grounded, and India’s compliance rating under the Cape Town Convention fell.

The Central Government’s Answer

On 3 October 2023, the Ministry of Corporate Affairs issued notification S.O. 4321(E) under section 14(3)(a) of the IBC, which permits the Central Government to notify transactions to which the moratorium does not apply. The notification recites India’s accession to the Cape Town Convention and Protocol on 31 March 2008 and provides that section 14(1) “shall not apply to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters”.

Because the moratorium in the Go First case had been imposed five months earlier, the immediate question became whether the notification operated retrospectively.

What the Delhi High Court Decided

In Accipiter Investments Aircraft 2 Ltd. v. Union of India, decided on 26 April 2024, a Single Judge of the Delhi High Court (Tara Vitasta Ganju, J.) decided the connected writ petitions of the lessors. Four holdings matter.

Rule 30(7) is mandatory. Following the coordinate bench decision in Awas 39423 Ireland Ltd. v. DGCA, the Court contrasted the permissive “may” in rule 30(6) with “shall be cancelled” in rule 30(7). Deregistration is a ministerial act once the prescribed documents are filed; disputes about the validity of the lease termination are irrelevant to it.

The High Court had jurisdiction. The petitions sought a writ against the DGCA for failure to perform a statutory duty under the Aircraft Act and Rules. That is a matter for Article 226, not for the NCLT, which cannot deregister an aircraft.

There was no inconsistency in the first place. The defaults under the leases, and the commencement of deregistration, preceded the insolvency commencement order. The termination was caused by default, not by the insolvency.

The notification is retrospective. Applying Zile Singh and the Division Bench decision in Nasa Finelease, the Court held that the notification cured a lacuna, was a necessary adjunct to India’s 2008 Declaration of Accession adopting “Alternative A” of Article XI of the Protocol, and that delay in issuing it could not defeat its beneficiaries.

The Court set aside the DGCA’s rejection letters, directed deregistration of the listed aircraft within five working days, permitted lessors to maintain the aircraft pending export, restrained the resolution professional from operating or stripping them, and required delivery of technical records. Go Airlines was later ordered into liquidation on 20 January 2025, and the NCLAT upheld that order on 4 April 2025.

India’s Aircraft Leasing Insolvency Framework

India then legislated. The Protection of Interests in Aircraft Objects Act, 2025 (Act 17 of 2025) received assent on 16 April 2025 and gives the Convention and Protocol the force of law in India (section 3). Four provisions repay attention:

• Section 6 applies Article XI of the Protocol, subject to India’s declaration, mutatis mutandis for remedies on insolvency “under any law for the time being in force” — but only where the debtor is Indian-incorporated or India-domiciled, the international interest has been registered under the Convention and Protocol, and the parties have not excluded the section by written agreement.
• Section 5(2) makes a creditor’s remedies conditional: no remedy may be exercised unless the creditor declares the default by notifying the registry authority (the DGCA).
• Section 8 designates the High Court having territorial jurisdiction as the relevant court for the purposes of Article 53 of the Convention.
• Section 9(1) gives the Act overriding effect over inconsistent law, while section 9(3) expressly preserves the right of the Government, its entities and public-service providers to arrest or detain an aircraft object for dues relating to services provided in respect of it.

The Protection of Interests in Aircraft Objects Rules, 2026 (G.S.R. 77(E), 30 January 2026) supply the machinery. Rule 11 is the operative provision on insolvency: where the debtor is subject to proceedings under the IBC, the moratorium under section 14 commences on the insolvency commencement date and expires at the end of two calendar months, and that period is the “waiting period”. No Convention or Protocol remedy may be prevented or restricted after it expires. During it, the resolution professional must preserve the aircraft object, maintain its value under the contract, and give the creditor access to the object and to its technical and maintenance records. The debtor or professional may retain possession only by curing all defaults other than the insolvency itself before the period ends and agreeing to perform future obligations.

What a Lessor must Actually Do?

Appendix A dues are airport operator charges, route navigation and facilitation charges, terminal navigation landing charges, fuel charges as a public service, and GST on the leasing or financing. Separately, India’s Second Schedule declarations give priority to certain non-consensual interests, including liens for unpaid airline wages after a declared default, authority liens for taxes and charges, and repairers’ liens. Repossession is therefore a process with a price, not a simple recovery.

What Remains Unsettled

Two points deserve candour. First, rule 11(1) speaks of the section 14 moratorium commencing and expiring at two months, while the 2023 notification disapplies section 14(1) to Convention transactions altogether. The two instruments are capable of being read harmoniously, but the relationship between them has not, as at 17 September 2026, been authoritatively settled by a superior court. Second, the Insolvency and Bankruptcy Code (Amendment) Act, 2026, substantial provisions of which were brought into force on 26 May 2026, did not disturb section 14(3)(a), so the 2023 notification continues to operate.

Frequently Asked Questions

1. How does insolvency affect aircraft leasing in India?

The IBC moratorium can restrict recovery of leased aircraft, subject to the Cape Town framework, the 2023 MCA notification and the 2026 Rules.

2. What is the Cape Town Convention’s role in aircraft repossession?

It establishes international rules for aircraft interests and provides remedies, including deregistration and recovery, subject to applicable conditions.

3. What is the waiting period under the Aircraft Objects Rules, 2026?

Rule 11 prescribes a two-calendar-month waiting period from the insolvency commencement date for relevant IBC proceedings.

4. Can aircraft lessors in GIFT IFSC deregister an aircraft after default?

Yes, subject to the applicable legal requirements, including IDERA, notification to the DGCA and relevant creditor claims and dues.

5. Which law governs aircraft leasing insolvency in India?

The principal framework includes the IBC, the Protection of Interests in Aircraft Objects Act, 2025, the 2026 Rules and the Cape Town Convention and Protocol.

Verification status / research cut-off: 17 September 2026. No appellate decision setting aside or modifying the judgment of 26 April 2024 was traced as at that date. The Act of 2025 is stated to have been brought into force on 1 May 2025 on the basis of published professional analysis; the commencement notification under s. 1(2) should be verified before reliance on that date. The Go Airlines liquidation dates are taken from reputable legal journalism rather than from the orders themselves.

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Aircraft leasing was the first non-banking business that GIFT IFSC set out to win, and the legal work required to make it possible illustrates how the IFSC framework is built: a Central Government notification to bring the activity inside the regulatory perimeter, an IFSCA framework to license it, and then, separately, a change in general Indian law to make creditor remedies work. The third element arrived in 2025 and 2026.

Step One: Aircraft Lease as a “Financial Product”

Aircraft leasing became a recognised financial product in GIFT IFSC through Central Government Notification S.O. 3652(E), dated 16 October 2020, under section 3(1)(d)(vi) of the IFSCA Act, 2019. The notification covered operating leases, financial leases and hybrid leases of aircraft, helicopters, engines and related parts.

The perimeter was then widened. Notification S.O. 5199(E) dated 14 December 2021 notified operating leases, including hybrids, of such products or equipment as IFSCA specifies. Using that power, IFSCA specified Aircraft Ground Support Equipment, being purpose-built mobile equipment for ground handling, servicing or field maintenance of aircraft on the ramp area and IATA-specified ground support equipment, together with equipment for ramp handling services as listed in the Airports Authority of India’s 2018 notification. Aviation training simulation devices were added in April 2023.

Step Two: The IFSCA Framework

The Framework for Aircraft Lease, issued by circular dated 18 May 2022 and updated to 26 February 2025, sets out how a lessor is licensed. It operates through the Finance Company Regulations (Article 17): an operating lease transaction for aircraft lease is a permitted non-core activity, while a financial lease, or a hybrid of financial and operating lease, is a permitted core activity.

Who may be a Lessor. An entity registered with IFSCA as a Finance Company or Finance Unit for aircraft leasing. The applicant must set up in the IFSC as a company or an LLP, with the promoters or holding structure located in a FATF-compliant jurisdiction. An IFSC entity that intends to undertake aircraft leasing only through wholly owned subsidiaries set up in the IFSC is itself deemed a Lessor.

What a Lessor may do. Operating leases of aircraft, ground support equipment and aviation training simulation devices; financial leases and hybrids; asset management support services for assets owned or leased out by the entity or its group entities; and sale and leaseback, purchase, novation, transfer and assignment transactions, together with other related activities approved by IFSCA.

Capital. A minimum owned fund of USD 200,000, or equivalent in freely convertible foreign currency, with power in IFSCA to require additional capital.

The Domestic-Asset Restriction

Clause O.2 of the framework, inserted and then amended in October 2024 and February 2025, addresses transactions with persons resident in India. A Lessor may not purchase, lease or otherwise acquire an asset covered by the framework from a person resident in India where, after the acquisition, the asset will be operated or used solely by persons resident in India, or to provide services to persons resident in India.

Three exceptions apply:

1. where the acquisition is from a person who is not a group entity of the Lessor;
2. where the acquisition is part of a sale and leaseback of assets being imported into India for the first time; and
3. where the asset is acquired from a manufacturer of the asset in India.

The policy is recognisable from elsewhere in the IFSC framework: the regime is not intended to be used to re-domicile purely domestic arrangements into the IFSC for concessional treatment, but genuine international transactions, including first-time imports on sale and leaseback, are expressly preserved.

Step Three: The Cape Town Legislation

India acceded to the Cape Town Convention and the Aircraft Protocol in 2008, but until recently the treaty was not implemented by primary legislation, which created uncertainty about creditor remedies when they collided with Indian law. The Protection of Interests in Aircraft Objects Act, 2025, passed by Parliament in April 2025 and assented on 16 April 2025, implements the Convention and Protocol.

The Protection of Interests in Aircraft Objects Rules, 2026 were notified by the Ministry of Civil Aviation by G.S.R. 77(E) dated 30 January 2026, and came into force on publication. Their principal features are:

• the DGCA as registry authority, maintaining an electronic Information System structured aircraft-object by aircraft-object (rule 5);
• an obligation on debtors to inform the DGCA of international interests within thirty days of an aircraft object’s registration in India, with six months from commencement for interests existing on that date (rule 6);
• quarterly electronic reporting of specified Appendix A dues — airport operator charges, route navigation and facilitation charges, terminal navigation landing charges, fuel charges as a public service, and GST on the leasing or financing — by the fifth day of the month following each quarter (rule 7);
• a requirement that a creditor notify the DGCA of a default in Form III before exercising any remedy (rule 9, reflecting section 5(2) of the Act);
• a two calendar month “waiting period” running from the insolvency commencement date, after which no Convention or Protocol remedy may be prevented or restricted (rule 11); and
• settlement by the IDERA holder of Appendix A dues arising after the default notification before export (rule 14).

For a GIFT IFSC lessor, this legislation is as important as the IFSCA framework. The framework determines whether the lessor may exist and what it may do; the Cape Town legislation determines what happens when a lessee defaults (Article 42).

Putting the Three Layers Together

Points for Lessors to Confirm

• Classify the lease. Operating and financial leases sit in different activity categories under the Finance Company Regulations, which affects capital and prudential treatment.
• Test clause O.2 at the asset level, not the portfolio level, and document which exception is relied on.
• Diarise the Cape Town compliance steps, including debtor intimation timelines and quarterly dues reporting, which fall on operators but affect a creditor’s ability to enforce.
• Check the tax conditions, several of which are keyed to commencement of operations by 31 March 2030.

Update to 15 October 2026

On 13 August 2026 IFSCA issued a consultation on a consolidated framework for leasing activity in the IFSC. Until a final framework is issued, the circulars discussed in this article remain the operative text. Any final framework should be checked for changes to the leasing entity’s eligibility, owned-fund and permissible-activity conditions. Comments closed on 2 September 2026 and, as at 15 October 2026, no final framework had been issued. A separate consultation of 18 August 2026 proposes to enable the operating lease (including hybrids of operating and financial lease) of GPUs and connected data-centre equipment as a financial product.

Frequently Asked Questions

1. What is aircraft leasing in GIFT IFSC?

Aircraft leasing in GIFT IFSC is a regulated activity that allows eligible entities to undertake operating leases, financial leases and related aviation asset transactions under the IFSCA framework.

2. Which regulations govern aircraft leasing in GIFT IFSC?

Aircraft leasing is governed by the IFSCA (Finance Company) Regulations, 2021, the Framework for Aircraft Lease, and applicable Central Government notifications.

3. What is the minimum capital requirement for an aircraft lessor in GIFT IFSC?

An aircraft lessor must maintain a minimum owned fund of USD 200,000 or its equivalent in freely convertible foreign currency, subject to IFSCA’s power to require additional capital.

4. What is the Cape Town Convention’s significance for aircraft lessors?

The Protection of Interests in Aircraft Objects Act, 2025, and the Rules, 2026, establish a legal framework for international interests in aircraft objects and creditor remedies following default.

5. Can a GIFT IFSC aircraft lessor acquire assets from Indian residents?

Yes, subject to the domestic-asset restriction under clause O.2 of the Framework for Aircraft Lease and its specified exceptions.

The post Aircraft Leasing From GIFT IFSC: The IFSCA Framework and India’s Cape Town Legislation appeared first on Bhatt & Joshi Associates.

Introduction

The Indian aviation sector has witnessed unprecedented legal and regulatory transformations in 2024-2025, marking a pivotal moment in the evolution of domestic Indian aviation law. These developments, driven by landmark cases and legislative reforms, have fundamentally altered the landscape of aviation governance, aircraft financing, and airline insolvency proceedings. The period has been characterized by the resolution of high-profile airline liquidations, the enactment of comprehensive new legislation replacing colonial-era laws, and the implementation of international conventions that promise to reshape India’s position in global aviation finance.

The confluence of judicial decisions, particularly in the Go First and Jet Airways insolvency cases, has exposed critical gaps in India’s aviation regulatory framework while simultaneously catalyzing urgent reforms. The National Company Law Tribunal’s handling of these cases has established new precedents for airline insolvency proceedings and aircraft lessor rights, fundamentally altering the balance between creditor protection and insolvency law moratoriums.

Simultaneously, the legislative branch has responded with sweeping reforms, including the Bharatiya Vayuyan Adhiniyam, 2024, which replaces the 90-year-old Aircraft Act, 1934, and the Protection of Interests in Aircraft Objects Bill, 2025, which implements the Cape Town Convention into Indian law. These legislative initiatives represent India’s commitment to modernizing its aviation legal framework and aligning with international best practices.

The Go First Liquidation Saga: A Watershed Moment in Aviation Insolvency

Background and Initial Proceedings

The Go First Airlines liquidation case has emerged as one of the most significant aviation law developments in recent Indian legal history, establishing crucial precedents for airline insolvency proceedings and aircraft lessor rights. On May 2, 2023, Go First filed a voluntary petition under Section 10 of the Insolvency and Bankruptcy Code, 2016 (IBC), citing financial distress and operational difficulties [1].

The airline’s decision to seek voluntary insolvency was precipitated by mounting debts totaling over ₹11,000 crores, including significant obligations to aircraft lessors and financial creditors. The National Company Law Tribunal (NCLT) admitted the application on May 10, 2023, appointing a Resolution Professional and imposing a moratorium under Section 14 of the IBC, which stayed all legal proceedings and recovery actions against the airline.

The Aircraft Deregistration Controversy

The Go First case brought to the forefront the tension between India’s insolvency law and international aviation financing practices, particularly regarding aircraft deregistration rights. Aircraft lessors argued that their lease agreements had been terminated prior to the insolvency filing due to Go First’s payment defaults, and therefore, their aircraft should not be subject to the IBC moratorium.

The lessors’ primary contention was that under international aviation law, particularly the Cape Town Convention principles, they retained the right to deregister and repossess their aircraft regardless of the airline’s insolvency status. However, the NCLT’s imposition of the moratorium effectively prevented the Directorate General of Civil Aviation (DGCA) from processing deregistration requests, creating a legal impasse.

Judicial Resolution and Precedential Impact

The matter reached the Delhi High Court, which, on April 26, 2024, delivered a landmark judgment directing the DGCA to deregister all 54 aircraft leased to Go First within five working days [2]. This decision represented a significant shift in judicial approach to the intersection of insolvency law and aviation regulation.

The High Court’s ruling was based on several crucial legal principles. First, the court recognized that the October 2023 notification by the Ministry of Corporate Affairs had clarified that Section 14(1) of the IBC would not apply to transactions involving aircraft, engines, airframes, or helicopters. Second, the court emphasized India’s international treaty obligations and the need to protect aircraft lessor rights in accordance with global aviation financing standards.

Most significantly, the Delhi High Court applied the October 2023 notification retrospectively to the Go First proceedings, departing from the traditional Indian legal principle that laws typically have only prospective application. The court reasoned that India’s international treaty obligations required strict adherence to lessor protection principles, and the notification had been issued specifically to address gaps in creditor protection highlighted by aviation insolvency cases.

NCLT Liquidation Order

On January 20, 2025, the NCLT finally ordered the liquidation of Go First, bringing to a close one of India’s most complex airline insolvency proceedings [3]. The liquidation order came after the Committee of Creditors unanimously decided in their 37th meeting on July 23, 2024, that liquidation was the only viable option due to the absence of feasible resolution plans.

The NCLT’s order appointed Mr. Dinkar T. Venkatasubramanian as the liquidator, replacing the originally proposed Resolution Professional in accordance with Insolvency and Bankruptcy Board of India guidelines advising against appointing the same individual as both Resolution Professional and liquidator. The tribunal approved litigation funding from Burford Capital under a Capital Provision Agreement to cover arbitration costs for proceedings at the Singapore International Arbitration Centre against engine manufacturer Pratt & Whitney.

Jet Airways: Supreme Court Confirms Liquidation

The Jalan-Kalrock Consortium Failure

In a parallel development that underscored the challenges facing airline restructuring in India, the Supreme Court of India, on November 7, 2024, ordered the liquidation of Jet Airways, once India’s premier airline [4]. The decision followed the failure of the Jalan-Kalrock Consortium, the successful resolution applicant, to implement the resolution plan approved by the NCLT in 2021.

The Supreme Court’s judgment in State Bank of India & Ors. v. The Consortium of Murari Jalan and Florian Fritsch & Anr highlighted several critical failures in the resolution process. The Consortium had failed to deposit the required first tranche payment of ₹350 crores in cash by the prescribed deadline, seeking instead to adjust the Performance Bank Guarantee against part of its payment obligations.

Legal Principles Established

The Supreme Court’s decision established several important legal principles for aviation insolvency proceedings. First, the Court held that resolution plans, once approved, cannot be modified by the NCLT, Committee of Creditors, or the successful resolution applicant. This principle, drawing from the Court’s earlier decision in the Ebix case, ensures the sanctity of approved resolution plans and prevents endless modifications that could undermine the insolvency resolution process.

Second, the Court emphasized that timely implementation of resolution plans is a fundamental objective of the IBC, and obligations under approved plans cannot be endlessly postponed or extended. This principle addresses a common problem in Indian insolvency proceedings where successful resolution applicants seek repeated extensions for plan implementation.

The Supreme Court also introduced the concept of creditor duties during insolvency proceedings, suggesting that creditors must actively contribute to successful and timely resolution to ensure the IBC’s objectives are achieved. While acknowledging that the Insolvency and Bankruptcy Board of India’s power to provide a code of conduct for banks and financial institutions is debatable, the Court emphasized the importance of all stakeholders working toward effective resolution.

Legislative Revolution: The Bharatiya Vayuyan Adhiniyam, 2024

Replacing Colonial Legacy

On January 1, 2025, the Bharatiya Vayuyan Adhiniyam, 2024 came into force, replacing the 90-year-old Aircraft Act, 1934 [5]. This legislative transformation represents one of the most significant overhauls of Indian aviation law since independence, modernizing the regulatory framework to address contemporary challenges in the aviation sector.

The 1934 Act, enacted during the colonial period, had been amended 21 times over the decades but remained fundamentally outdated in addressing the complexities of modern aviation operations, emerging technologies, and international regulatory standards. The new legislation provides a comprehensive framework for regulating aircraft design, manufacture, maintenance, operation, and safety oversight.

Key Provisions and Innovations

The Bharatiya Vayuyan Adhiniyam retains the three-pillar regulatory structure established by the 2020 amendments to the Aircraft Act, 1934. The Directorate General of Civil Aviation (DGCA) continues to perform regulatory functions and oversee safety, the Bureau of Civil Aviation Security (BCAS) maintains responsibility for security oversight, and the Aircraft Accidents Investigation Bureau (AAIB) handles aircraft accident investigations.

However, the new Act significantly expands the powers of these regulatory bodies, particularly the DGCA and BCAS, enabling more effective regulation of the rapidly evolving aviation industry. The legislation incorporates provisions for emerging technologies, including enhanced regulation of drone operations, which had become increasingly important with the growth of unmanned aircraft systems in commercial and recreational applications.

Consumer Protection and Appeals Mechanism

One of the most significant innovations in the new Act is the introduction of a robust appeals mechanism for regulatory decisions. Unlike the previous framework where appeals against DGCA or BCAS decisions were limited to the Union Government, the new Act provides for a more structured appellate process, potentially improving the efficacy of regulatory oversight.

The Act also strengthens consumer protection provisions, introducing a streamlined, time-bound grievance redressal system for passengers. This online platform is designed to provide efficient resolution of passenger complaints, ensuring higher service quality and better consumer protection in aviation services.

Sustainability and Environmental Considerations

The Bharatiya Vayuyan Adhiniyam incorporates provisions promoting sustainable aviation practices and environmental protection. The legislation encourages the adoption of green technologies in aviation operations and provides a framework for reducing carbon emissions from aircraft operations. These provisions align with global efforts to address climate change and environmental sustainability in the aviation sector.

Implementation of the Cape Town Convention: The Protection of Interests in Aircraft Objects Bill, 2025

International Treaty Implementation

The passage of the Protection of Interests in Aircraft Objects Bill, 2025 by both houses of Parliament represents a culmination of nearly two decades of efforts to implement the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol into Indian law [6]. India had ratified the Convention in 2008, but the absence of domestic implementing legislation had prevented the practical application of its creditor protection provisions.

The Cape Town Convention, adopted in 2001, establishes a uniform legal framework for asset-based financing and leasing of aircraft, helicopters, and engines. The Convention creates standardized legal mechanisms for protecting the interests of lessors and creditors in international aviation finance transactions, reducing legal uncertainty and facilitating more efficient aircraft financing.

Key Features of the Indian Implementation

The Protection of Interests in Aircraft Objects Bill designates the DGCA as the domestic registry for aircraft-related international interests and dues, centralizing the administration of aircraft financing information. Airlines are required to report dues to lessors on a per-aircraft basis, while lessors must inform the DGCA about their operations and interests in India.

The legislation provides crucial protections for lessors in airline insolvency scenarios, addressing the very issues highlighted by the Go First case. In case of default, the Bill allows creditors or lessors to reclaim possession of aircraft within two months or a mutually agreed period, providing much-needed certainty for international aviation financiers.

Importantly, the Bill establishes that in case of inconsistencies between its provisions and other laws, the Cape Town Convention provisions will prevail to the extent of the inconsistency. This supremacy clause ensures that international creditor protection standards take precedence over potentially conflicting domestic legislation.

Impact on Aviation Financing

The implementation of the Cape Town Convention is expected to significantly reduce aircraft leasing costs for Indian airlines, with industry estimates suggesting savings of 10-15% on leasing rates. This reduction in financing costs stems from the decreased risk perception among international lessors and financiers, who will have enhanced legal certainty regarding their rights in Indian aviation transactions.

The legislation is particularly beneficial for startup airlines and regional carriers, which often struggle to access aircraft financing due to higher perceived risks. Enhanced creditor protections should facilitate easier access to modern aircraft, supporting fleet modernization efforts across the Indian aviation sector.

Regulatory Developments and Policy Initiatives

Ground Handling Services Framework

On July 8, 2024, the DGCA issued the Civil Aviation Requirement for Ground Handling Services (GH CAR), establishing a comprehensive framework for the safety clearance and operations of Ground Handling Service Providers at licensed airports in India [7]. This regulatory development addresses a critical gap in aviation safety oversight by establishing standardized requirements for ground handling operations.

The GH CAR requires all Ground Handling Service Providers to obtain safety clearance from the DGCA within six months of the regulation’s issuance. Providers must develop comprehensive Ground Handling Service Manuals, implement Safety Management Systems, and maintain proper training and certification for personnel. The regulation also mandates regular audits, incident reporting, and emergency response planning to ensure ongoing compliance with safety standards.

Tax and Economic Reforms

The Ministry of Finance, effective July 15, 2024, implemented a uniform Integrated Goods and Services Tax rate of 5% on import of aircraft, representing a significant reduction in the tax burden on aircraft imports. This tax reform is expected to reduce the cost of aircraft acquisition for Indian airlines and promote fleet modernization efforts.

The GIFT City initiative gained momentum in 2024, with approximately 30 aircraft lessors registering and more than 120 aviation assets, including aircraft, helicopters, and engines, being leased from GIFT City. However, the expected movement of aircraft financiers to GIFT City has yet to fully materialize, indicating ongoing challenges in establishing India as a regional aviation finance hub.

Competition Law Developments

The Competition Commission of India issued new Combination Regulations in September 2024, replacing earlier regulations and introducing a deal value threshold for merger control notifications. Transactions involving the acquisition of control, shares, voting rights, or assets with a deal value exceeding ₹2,000 crores, where the target enterprise has substantial business operations in India, now require CCI approval.

These regulatory changes particularly impact airline mergers and acquisitions, as demonstrated by the proposed merger between Air India and Vistara, which was completed in March 2024. The new regulations provide greater clarity for aviation sector consolidation while ensuring appropriate competition oversight.

Litigation Funding and Financial Innovation

Third-Party Litigation Funding

The Go First liquidation case has emerged as a notable instance of litigation funding in India, with Burford Capital providing financial support for the airline’s arbitration proceedings against Pratt & Whitney at the Singapore International Arbitration Centre. The NCLT’s approval of this arrangement, despite initial reservations about third-party funding, represents a significant development in Indian litigation finance.

The tribunal’s acceptance of litigation funding arrangements was based on Supreme Court precedent recognizing the permissibility of third-party litigation funding under Indian law. This development is expected to be game-changing for Indian aviation law and other sectors, with several litigation funders likely to show increased interest in Indian legal proceedings.

Airport Development and Private Participation

The aviation infrastructure sector continued to evolve with significant private participation in airport development and operations. As of December 2023, airports in Ahmedabad, Bengaluru, Cochin, Delhi, Guwahati, Hyderabad, Jaipur, Lucknow, Mangaluru, Mumbai, Kannur, Durgapur, Mopa, and Thiruvananthapuram operate under public-private partnership models through Operation, Management, and Development Agreements with the Airports Authority of India.

The government granted “in principle” approval for approximately 21 greenfield airports to be developed by private parties, state governments, or other government agencies. Notable developments include the operational commencement of Manohar International Airport in Goa and the anticipated opening of Noida International Airport (Jewar Airport) and Navi Mumbai International Airport.

Consumer Protection and Digital Initiatives in Indian Aviation

AirSewa Platform Enhancement

The DGCA’s AirSewa web portal and mobile application continued to evolve as the primary platform for addressing travel-related passenger grievances. The platform provides a centralized mechanism for passengers to lodge complaints and seek redressal from airlines, contributing to improved consumer protection in the aviation sector.

The integration of artificial intelligence and automated response systems has enhanced the platform’s efficiency in handling passenger complaints and providing timely resolution. The platform’s data analytics capabilities also provide valuable insights into common passenger issues, enabling proactive regulatory interventions.

Safety Management Systems

The implementation of Safety Management Systems across various aviation sectors gained momentum in 2024, with enhanced requirements for airlines, ground handling service providers, and airport operators. The DGCA’s emphasis on proactive safety management, including risk assessment, incident reporting, and continuous improvement processes, reflects international best practices in aviation safety oversight.

Environmental Sustainability and Compliance Under Indian Aviation Law

Carbon Emission Reduction

The Bharatiya Vayuyan Adhiniyam incorporates provisions promoting sustainable aviation practices, reflecting India’s commitment to environmental protection and carbon emission reduction. The legislation encourages the adoption of green technologies and sustainable aviation fuels, aligning with global initiatives to address climate change in the aviation sector.

The Civil Aviation Ministry, under the evolving framework of Indian aviation law, has launched several sustainability initiatives. These include promoting the use of sustainable aviation fuels, encouraging airlines to adopt fuel-efficient aircraft and operational practices, and supporting research and development in green aviation technologies.

Noise and Environmental Compliance

Enhanced environmental compliance requirements for airport operations and aircraft noise management have been implemented, reflecting growing awareness of aviation’s environmental impact. Airports are required to implement noise monitoring systems and take measures to minimize environmental impact on surrounding communities.

Future Outlook and Emerging Challenges in Indian Aviation Law

Technology Integration and Regulatory Adaptation

The rapid advancement of aviation technology, including artificial intelligence, autonomous systems, and electric aircraft, presents ongoing challenges for regulatory adaptation. The Bharatiya Vayuyan Adhiniyam provides a framework for addressing emerging technologies, but continuous regulatory evolution will be necessary to keep pace with technological developments.

The integration of unmanned aircraft systems into the national airspace system requires sophisticated regulatory oversight, air traffic management systems, and safety protocols. The Drone Rules, 2021, provide a foundation for this integration, but ongoing refinement will be necessary as the technology matures.

International Cooperation and Harmonization

India’s efforts to align its aviation regulatory framework with international standards through the Cape Town Convention implementation and the modernization of the Aircraft Act demonstrate a commitment to international cooperation. Continued harmonization with International Civil Aviation Organization standards and bilateral aviation agreements will be crucial for supporting India’s growing role in global aviation.

The development of mutual recognition agreements for aviation safety and security oversight with international partners will facilitate easier market access for Indian airlines and aviation service providers while ensuring maintain safety and security standards.

Conclusion

The period 2024-2025 has marked a transformative era in Indian aviation law, characterized by landmark judicial decisions, comprehensive legislative reforms, and significant regulatory developments. The resolution of major airline insolvency cases has established important precedents for creditor rights and insolvency proceedings, while the implementation of modern legislation has positioned India to address contemporary aviation challenges effectively.

The Go First and Jet Airways liquidations have provided crucial insights into the intersection of Indian aviation law and insolvency regulation, leading to enhanced protections for aircraft lessors and clearer procedures for airline restructuring. These cases have demonstrated the importance of balancing debtor protection with creditor rights, particularly in the context of international aviation finance.

The enactment of the Bharatiya Vayuyan Adhiniyam, 2024, and the implementation of the Cape Town Convention through the Protection of Interests in Aircraft Objects Bill, 2025, represent India’s commitment to modernizing its aviation legal framework and aligning with international best practices. These legislative initiatives promise to reduce financing costs, enhance investor confidence, and position India as an attractive destination for aviation investment.

The regulatory developments in ground handling services, consumer protection, and environmental sustainability demonstrate the government’s comprehensive approach to aviation sector development. The integration of digital platforms for grievance redressal and the emphasis on safety management systems reflect modern approaches to aviation oversight and consumer service.

Looking forward, the success of these reforms will depend on effective implementation, continued regulatory adaptation to technological developments, and ongoing harmonization with international standards. Given the sector’s rapid growth and innovation, Indian aviation law will require continuous refinement to ensure safety, efficiency, and global competitiveness.

The transformation of Indian aviation law in 2024-2025 provides a solid foundation for the sector’s continued growth and development. The enhanced legal certainty, improved creditor protections, and modernized regulatory framework position India to capitalize on the significant opportunities in domestic and international aviation markets while maintaining the highest standards of safety and service quality.

References

[1] Go Airlines (India) Limited v. Committee of Creditors, NCLT Order dated January 20, 2025. Available at: https://www.scconline.com/blog/post/2025/01/21/nclt-allows-liquidation-of-go-first-airways-scc-times/ 

[2] Delhi High Court Order in Go First Aircraft Deregistration Case, April 26, 2024. Available at: https://www.business-standard.com/companies/news/go-first-airways-liquidation-nclt-insolvency-bankruptcy-crisis-125012000326_1.html 

[3] NCLT Liquidation Order, Go Airlines (India) Limited, January 20, 2025. Available at: https://www.businesstoday.in/industry/aviation/story/nclt-orders-liquidation-of-budget-airline-go-first-461388-2025-01-20 

[4] State Bank of India & Ors. v. The Consortium of Murari Jalan and Florian Fritsch & Anr, Supreme Court of India, November 7, 2024. Available at: https://corporate.cyrilamarchandblogs.com/2024/11/jet-set-and-grounded-supreme-court-orders-liquidation-of-jet-airways/ 

[5] The Bharatiya Vayuyan Adhiniyam, 2024, Government of India. Available at: https://www.business-standard.com/industry/news/new-aviation-law-bharatiya-vayuyan-adhiniyam-to-take-effect-from-jan-1-124123100949_1.html 

[6] The Protection of Interests in Aircraft Objects Bill, 2025, Parliament of India. Available at: https://www.insightsonindia.com/2025/04/03/cape-town-convention/ 

[7] Civil Aviation Requirements for Ground Handling Services, DGCA, July 8, 2024. Available at: https://iclg.com/practice-areas/aviation-laws-and-regulations/india

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