Industry sources said the budget consideration proposal, if implemented, could address airlines’ financing needs for aircraft purchases. | Photo credit: iStockphoto
Speak withbusiness lineIndustry sources said the budget consideration proposal, if implemented, could address airlines’ financing needs for aircraft purchases.
Currently, more than 1,700 aircraft have been ordered by major Indian-based airlines. However, smaller operators face challenges in acquiring aircraft through leasing arrangements.
In this context, some players are considering the direct purchase of aircraft; However, high interest rates and reluctance within the domestic banking sector have curtailed such plans.
Furthermore, the infrastructure tag would enable airlines to apply for loans for purchasing aircraft at lower rates under the Priority Sector Lending (PSL) scheme.
The PSL framework is regulated by the Reserve Bank of India (RBI) and directs banks to allocate a portion of lending to identified sectors.
According to industry insiders, the previous Union Budget granted infrastructure status to commercial shipping vessels, resolving all concerns related to granting such status to movable assets.
This development has led to renewed interest within the aviation sector for a similar designation for commercial aircraft.
According to sources, the Center wants to improve access to credit for the aviation industry, especially for airlines operating small capacity aircraft.
In particular, the infrastructure classification of aircraft loans would allow airlines to access financing from a wider range of lenders.
The measure is expected to be relevant for airline startups and could encourage banks to increase their exposure to the sector.
Moreover, industry insiders said the framework should include guidelines requiring Indian-owned aircraft to be on the regulator’s register and governed by national laws, providing clarity on jurisdiction and repossession in case of default.
Industry executives stated that infrastructure classification could support a transition from operating leases to finance leases, while addressing concerns related to domestic lending hesitation and interest rates.
Consequently, eligibility under PSL standards could help align financing structures.
They added that rupee loans for aircraft purchases could reduce foreign exchange outflows as fleet induction increases.
In addition, infrastructure classification could open up the participation of insurance companies and allow banks to extend longer repayment terms.
Experts further suggested expanding the scope beyond commercial aircraft to include twin-engine helicopters used in offshore oil and gas, mining and exploration activities, along with business and corporate aircraft operated by core infrastructure companies.
They said financing of aircraft and helicopters should follow a universal framework and not be limited to special government vehicles like Gujarat International Finance Tec-City (GIFT City).
Currently, India has more than 800 commercial aircraft in service.
Published on January 18, 2026
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