The deal marks India’s growing control over aircraft leasing through GIFT City’s financial framework.

Every airline dreams of owning its fleet without relying on foreign financiers. That dream edged closer to reality when Standard Chartered Bank and Bank of India approved a $215 million aviation sector financing for AI Fleet Services IFSC Ltd (AIFS), the leasing arm of Air India.

The transaction is the first commercial aircraft financing completed inside GIFT City, giving Indian aviation a fresh economic lift amid a slowing global outlook.

The RBI’s Monetary Policy Report (April 2025) stated that the “growth outlook is softer and below expectations,” hinting that India’s economy needs capital projects to stay on track. This aviation financing deal fits that requirement perfectly.

New Development: $215 Million Loan Strengthens Air India Subsidiary Loan Funding

In October 2025, AIFS, a leasing arm of Air India registered under GIFT City’s International Financial Services Centre (IFSC), secured a seven-year amortising term loan from Standard Chartered Bank and Bank of India. The loan will help refinance short-term debt and purchase six Boeing 777-300ER aircraft.

Both lenders acted as Mandated Lead Arrangers. The deal has been structured to promote India’s aircraft leasing ecosystem under IFSCA’s revised 2024 framework.

According to Moneycontrol and The Economic Times, this transaction showcases how Indian lenders are now stepping into aviation funding, a space earlier dominated by global banks in Dublin and Singapore.

Before moving ahead, here’s a look at the deal’s key financial details.

Detail	Data / Description
Loan amount	USD 215 million
Borrower	AI Fleet Services IFSC Ltd (AIFS)
Lenders	Standard Chartered Bank, Bank of India
Aircraft financed	6 Boeing 777-300ER

This loan helps Air India’s broader fleet expansion and strengthens domestic financing for large aviation assets. The next section explains how this structure works under India’s aviation finance policy.

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What Makes Aircraft Leasing Work?

Aircraft leasing is a financial model where airlines operate aircraft by paying lease rentals instead of buying them outright. It helps control costs and maintain fleet flexibility.

The International Financial Services Centres Authority (IFSCA) has been actively shaping this sector. Its 2023–24 Annual Report mentions that GIFT City already hosts 30 aircraft leasing entities under regulatory oversight. To strengthen this model, the Ministry of Civil Aviation and IFSCA jointly organised the India Aircraft Leasing and Financing Summit 2025 in Gandhinagar, promoting GIFT City as a global aviation finance hub.

Policy / Framework	Issued By	Objective	Date
Framework for Aircraft Lease	IFSCA	Regulate and enable leasing inside GIFT IFSC	Nov 2023
Protection of Interests in Aircraft Objects Bill	Government of India	Secure lessors’ rights in case of default	Jan 2025
India Aircraft Leasing Summit	Ministry of Civil Aviation	Promote local aircraft financing ecosystem	Mar 2025

These measures allow Indian banks like Bank of India to finance aircraft without facing the foreign exchange restrictions that existed earlier. The regulations have created a path for domestic financing and reduced dependency on overseas lessors.

The next section explores how this new loan connects with earlier aviation financing efforts.

Linking The Past: Air India’s Earlier Aircraft Financing Deals

Air India had previously made headlines with another first. In December 2023, the airline financed the acquisition of its first Airbus A350-900 through AIFS at GIFT City, in partnership with HSBC. That move was covered widely in Air India’s press release (Air India Press Release, 2023).

This earlier success established the groundwork for the Standard Chartered Bank financing deal and Bank of India term loan approval. Together, these transactions show a clear shift toward domestic aviation leasing.

Previous Deal	Value	Financier	Aircraft Type
Airbus A350 Financing	USD 150 million	HSBC	A350-900
Axis Bank Pilot Fleet Finance	USD 22 million	Axis Bank, GIFT IBU	34 Training Aircraft
Air India Boeing Financing	USD 215 million	Standard Chartered & BOI	6 Boeing 777-300ER

Each of these deals reflects growing trust in India’s ability to fund large aviation assets through GIFT City. It signals a wider goal, to retain more financial activity within India and reduce foreign dependence.

As LoansJagat reported in “A.P. Govt. to Guarantee ₹1,000-Crore Loan for Seven Airports”, aviation and infrastructure projects are increasingly being financed through domestic systems backed by public guarantees and partnerships.

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How Banks And The Government Responded

Public sector banks earlier hesitated to enter aircraft leasing because of high asset risk. However, after Air India’s disinvestment in January 2022, the Ministry of Finance encouraged PSU banks to take calculated exposure under regulated frameworks like IFSCA’s 2024 Circular on Financial Products.

The IFSCA’s Report on Financial Services (2024) confirmed that banks operating in GIFT City can extend credit under adjusted exposure norms. This change opened the door for institutions such as Bank of India to enter aviation financing confidently.

Institution	Action / Reform	Year
Bank of India	Approved its first aviation term loan through GIFT IFSC	2,025
Standard Chartered Bank	Expanded aircraft finance business to India	2,025
Ministry of Civil Aviation	Declared GIFT City as an Aviation Finance Hub	2,025

These developments show a coordinated shift in India’s financial approach, aligning banking reforms with the aviation growth strategy.

India’s Growth Outlook And Global Tariffs

The loan comes at a time when the RBI’s April 2025 Monetary Policy Report pointed to a softer growth outlook, driven by global trade slowdowns and weaker exports. According to the Ministry of Commerce’s April 2025 bulletin, India’s merchandise exports dropped by 1.4%, affected by the impact of US tariffs on India’s economic growth.

Despite this pressure, the aviation sector remains strong. India’s air passenger traffic grew by 9.2% in FY2024–25, as per data from the Directorate General of Civil Aviation (DGCA). The new Air India debt funding partnership is expected to attract foreign investors into Indian leasing markets.

Indicator	Data	Report / Source	Year
Export Growth Rate	-1.40%	Ministry of Commerce	2025
Passenger Traffic Growth	9.20%	DGCA Report	2025
Projected Aviation Financing Flow	USD 10 billion by 2030	IFSCA Forecast	2025

Such financing deals help maintain foreign exchange stability while strengthening domestic credit markets.

Conclusion

The $215 million aviation sector financing is more than just a corporate transaction. It demonstrates how GIFT City is transforming into a hub for aviation credit, comparable to Singapore or Dublin.

The IFSCA’s Interim Report (May 2025) forecasts at least five new aviation finance deals by the end of 2026. Experts believe these efforts could save airlines millions in leasing costs and create jobs in aviation law, finance, and insurance.

Even as the RBI Governor Sanjay Malhotra noted that the growth outlook is softer and below expectations, such structured transactions offer a way to steady India’s economic momentum.

This financing deal proves that India’s skies are not only open to travel but also to finance. The country is quietly building an ecosystem where Indian banks, policy reforms, and global investors share one runway, inside GIFT City.

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