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10/08/2019 - Government Policies

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August 10, 2019

As India becomes a large domestic and international aviation market, there is a need to create rupee based aircraft leasing industry. Substantiate.(200 Words)

Refer Financial Express

Enrich the answer from various sources, if the question demands.

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IAS Parliament 5 years

KEY POINTS

·        As the world’s third largest domestic aviation market, the time is ripe for India to enter into aircraft financing and leasing activities from Indian shores.

·        This is critical to the development of a self-reliant aviation industry, creating aspirational jobs in aviation finance, besides leveraging the business opportunities available in India’s financial Special Economic Zones (SEZs), namely, International Financial Services Centre (IFSC).

·        The announcement of this policy statement in the Budget follows the release of the ‘Rupee Raftaar’ report at the Global Aviation Summit in Mumbai.

·        For Ireland, this industry creates jobs not only in the financial services sector but also in aircraft MRO, asset management, ancillary products, etc. The aircraft leasing sector directly employs around 1,500 people with an average salary of EUR 165,000 (~Rs 1.2 crore) a year.

·        There are another 3,500 indirect jobs and a whole host of jobs and incomes in the associated industries. The sector is estimated to contribute $660 million to the Irish economy.

·        Most Indian carriers rely on leasing their planes: more than three-fourths of planes of airlines in India (with the exception of Air India) are leased. These leases are typically for six years and are denominated in USD.

·        Annual lease rentals of around Rs 10,000 crore is sent to lessors based out of India, accounting for ~15% of the total revenues of the India-based airlines (except Air India). As the growth in Indian aviation continues, this total outflow is expected to triple in the next decade or so.

·        New accounting standards (Ind-AS 116), requires that even the operational leases (as opposed to only finance leases earlier) need to be capitalised in the books of the airlines.

Building an India-based rupee leasing industry

Creating a rupee-based leasing industry will address many objectives:

·        high-skill job creation in financing and across the value chain,

·        retaining economic value in India,

·        offering local savers a new investment class,

·        creating a product more-suited to the needs and requirements of the local industry. 

Krish 5 years

Kindly review sir,Thank u

IAS Parliament 5 years

Try to include about raaftar report, Indian accounting standard. Keep writing.

K. V. A 5 years

Pls review

IAS Parliament 5 years

Try to include about raaftar report, try to provide data, include about Indian accounting standard about airlines. Keep writing.

Anu 5 years

Kindly review. Thank you

IAS Parliament 5 years

Good attempt. Try to include about maintanence and repair organisations. Keep Writing.

Mirudula Parthibarajan 5 years

Kindly review my answer.thanks in advance

IAS Parliament 5 years

Good attempt. Try to include about the absence of Maintanence and repair organisation (MRO). Keep Writing

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