India’s Parliament has passed a landmark aviation bill aimed at bolstering the confidence of global aircraft lessors, marking a significant shift in how the country handles aircraft repossession in cases of airline default. The “Protection of Interests in Aircraft Objects” bill, approved on Thursday, brings Indian law in line with the Cape Town Convention and Protocol—an international agreement governing asset-based aviation financing.
This legislative move is seen as a major win for international lessors, who have long sought stronger legal protections in the Indian market. The issue gained widespread attention in 2023 when lessors such as SMBC Aviation Capital faced hurdles in repossessing aircraft from Go First after the airline declared bankruptcy. At the time, India’s domestic bankruptcy laws took precedence over international leasing norms, frustrating lessors and raising concerns over the legal risks of operating in the country.
The new bill aims to correct that imbalance by ensuring that aircraft and engine repossession rights under global agreements are respected in India. It provides a more predictable legal framework for lessors and financiers, reducing risk and potentially lowering leasing costs for Indian airlines.
The reform comes at a time when India is witnessing rapid growth in air travel, making it one of the most critical emerging markets for aircraft leasing. With the passage of this bill, the government hopes to attract more leasing activity and investment into its aviation sector while strengthening its global credibility in aviation finance.
