The government plans to put in place an "enabling regulatory ecosystem" for aircraft financing and leasing at international financial service centres in India amid domestic airlines placing large orders for planes, according to Civil Aviation Minister Suresh Prabhu.

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India is the fastest-growing domestic aviation market in the world and many of the local carriers are to induct a substantial number of planes into their respective fleets. Currently, there are around 600 aircraft operated by domestic scheduled airlines and firm orders have been placed for another 1,000 planes to be taken in the next five to six years, as per official estimates.

Against this backdrop, Prabhu has said that the Civil Aviation Ministry is proposing to have an enabling regulatory ecosystem for aircraft financing and leasing business. This business is dominated by entities based out of foreign countries, including Ireland and China, while India's role is not significant in this segment.

In a communication, Prabhu said aircraft financing and leasing is a "highly profitable business proposition" that has provided double-digit returns to investors globally even during the financial crisis. Considering the air passenger and air cargo growth in India, Prabhu said aircraft financing and leasing provides attractive opportunities for generating new business in the country.

"The ministry proposes to populate the enabling regulatory ecosystem in the offshore International Financial Service Centre (IFSC) in India, the Gujarat International Finance Tec (GIFT) City in Ahmedabad.

"It is also expected that the IFSC coming up in Mumbai will also benefit enormously after it becomes operational," the minister said. Earlier this month, aircraft maker Boeing projected that Indian carriers would need 2,300 planes worth USD 320 billion in the next 20 years amid unprecedented domestic passenger growth.