Why Aircraft Lessors Are Rethinking Ireland: GIFT City's Leasing Pitch

For decades, if you wanted to lease an aircraft into an airline fleet - including Indian airline fleets - the structure almost certainly ran through Ireland. Irish leasing SPVs became the industry default not by accident, but because Ireland offered the combination of favourable tax treatment, a mature legal and aviation-finance ecosystem, and treaty access that made cross-border leasing efficient. GIFT City is now making a direct, deliberate pitch to disrupt that default - and the economics are close enough to warrant a serious look.

What GIFT City actually offers

Aircraft and ship leasing is a specifically recognised activity for GIFT IFSC finance companies, and the tax treatment stacks across three distinct provisions rather than one. Section 80LA(2)(d) exempts income arising from the transfer of a leased aircraft or ship by an IFSC unit. Section 10(4F) exempts a non-resident's royalty and interest income from an aircraft or ship lease with an IFSC unit. Section 10(4H) exempts capital gains a non-resident or IFSC unit earns on transferring shares of a domestic company that is itself an IFSC unit engaged in aircraft leasing - with a matching dividend exemption under Section 10(34B) for dividends paid between such units.

Notably, until the Finance Act, 2025, several of these benefits were drafted around aircraft leasing specifically. That Act extended the Section 10(4H) capital-gains exemption and the Section 10(34B) dividend exemption to ship-leasing businesses as well, bringing the two asset classes onto equal footing for the first time.

Layer that onto the broader GIFT City package - the Section 80LA income-tax holiday on ordinary business income, reduced MAT, GST exemption on qualifying services, and the general absence of the withholding-tax friction that has historically pushed this business offshore - and the jurisdictional comparison starts to look genuinely competitive rather than aspirational.

The detail that changes the calculus

Here is what a lot of aviation-finance teams evaluating GIFT City may not have priced in correctly: the commencement-of-operations deadlines attached to each of these provisions - originally staggered across 2025 and 2026 depending on the specific section - were all moved out to a common 31 March 2030 by the Finance Act, 2025. A lessor group that assumed it had "missed the window" to set up in GIFT City on favourable terms almost certainly has not.

That extension matters strategically, not just administratively. It gives lessor groups genuine time to evaluate GIFT City properly - building out the necessary aviation-finance expertise, testing the regulatory relationship, and structuring a first transaction - rather than feeling pressured into a rushed decision against an artificial deadline.

Why India specifically

Beyond the tax mechanics, there is a demand-side logic unique to GIFT City that Ireland does not offer: proximity to India's own airline fleets, which have been a significant and growing source of new aircraft-leasing demand over the past decade. Every aircraft leased into an Indian carrier's fleet from an offshore jurisdiction currently represents value - advisory work, financing structuring, servicing relationships - that could plausibly sit onshore-adjacent in GIFT City instead. The Indian government's broader push to bring India-linked financial services business back into GIFT IFSC is squarely aimed at capturing exactly this kind of activity.

What still needs to be worked through

None of this means Ireland's ecosystem gets displaced overnight. Established lessor groups have deep relationships, precedent-based deal structures, and lender familiarity built up in Ireland over decades - advantages that do not disappear because a competing jurisdiction offers comparable tax treatment. The realistic near-term opportunity is less "wholesale migration" and more "new leasing SPVs and India-linked leasing structures increasingly defaulting to GIFT City," while existing Irish structures run their course.

The takeaway

If your aviation-finance practice or leasing business has been treating GIFT City as a future consideration rather than a current one, the extended sunset clause is a good reason to revisit that assumption now. The runway is longer than commonly believed, and the underlying economics are closer to Ireland's than the "GIFT City is still developing" narrative might suggest.