India to ratify Cape Town convention for aircraft leasing

India is taking steps to ratify the Cape Town Convention, a key international agreement governing aircraft leasing, following the Union Cabinet’s approval of a bill. This move comes as India’s civil aviation market continues to grow, with airlines placing orders for over 1,200 planes.

India is set to provide legal backing to the Cape Town Convention, which primarily governs aircraft leasing, following the Union Cabinet’s approval of a bill. The country, one of the fastest-growing civil aviation markets globally, has domestic carriers that have placed orders for over 1,200 planes. Civil Aviation Secretary Vumlunmang Vualnam confirmed that the bill, aimed at promoting aircraft leasing, will soon be presented to Parliament for approval.

“We are hopeful that sooner than later Cape Town Convention will have the legal backing in India and become enforceable greatly supporting leasing and acquiring of aircraft,” Vualnam said at the International Conference on Air Mobility in Greater Noida, organized by CII and the civil aviation ministry.

The Cabinet recently cleared the Protection and Enforcement of Interests in Aircraft Objects Bill, which seeks to enforce the provisions of the Convention on International Interests in Mobile Equipment (Cape Town Convention) and its Protocol on Aircraft Equipment. The Cape Town Convention allows lessors to reclaim aircraft leased to airlines.

The issue of reclaiming leased aircraft became prominent when Go First, undergoing insolvency, had a moratorium preventing lessors from retrieving their planes. Eventually, an ad hoc arrangement enabled lessors to regain their leased aircraft. While India is a signatory to the Cape Town Convention, it has not yet ratified it.

Meanwhile, the Bharatiya Vayuyan Adhiniyam, 2024, which replaces the 90-year-old Aircraft Act, came into effect on January 1. This legislation aims to promote aircraft design and manufacturing in India and enhance ease of doing business in the aviation sector.