The Protection of Interests in Aircraft Objects Act, 2025 (Cape Town Act) has received the assent of the President of India on April 16, 2025. The Cape Town Act will come into force on the date appointed by the Indian Government. Our summary of the key provisions of the Cape Town Act is available here.

Impact on the Indian Aviation sector

i.    We are optimistic that the appointed date bringing the Cape Town Act into effect will be notified by the Government relatively soon. The passing of the Cape Town Act provides the level of protection enjoyed by overseas lenders and lessors globally and significantly reduces the India-jurisdiction risk for such parties.

ii.   Directions prescribed by the Directorate General of Civil Aviation (DGCA) for implementation of the Cape Town Convention and Protocol are awaited.

iii.  The Cape Town Act along with positive changes in Indian regulations related to easing repossession by lessors in GIFT City will go a long way in increasing investor confidence in GIFT City. These developments will also pave the way for Indian and foreign leasing platforms for aircraft and engines to be established on Indian soil.

iv.   The passing of the Cape Town Act by the Indian Parliament has had a positive impact on the CTC Compliance Index for India published by the Aviation Working Group (AWG).

v.    With the enactment of the Cape Town Act, India will be a step closer to becoming eligible for OECD discounts. During recent discussions in Parliament, the Government highlighted that passing of the Cape Town Act would result in lowering leasing costs for Indian airlines, which would have a trickle-down effect resulting in lower fares for Indian flyers.

vi.   As the Cape Town Act takes effect, certain provisions will require a closer look. By way of example, while the Cape Town Act expressly states that in case of any inconsistency between the Act and any other law, the provisions of the Cape Town Act will prevail, the provisions related to registration and enforcement of the irrevocable de-registration and export request authorization (IDERA) are expressly subject to the Bharatiya Vayuyan Adhiniyam, 2024 (this Act replaced the Aircraft Act, 1934). We have highlighted to the Government that appropriate clarification be considered for harmonious interpretation and from a practical implementation standpoint and have received positive feedback.

If you have any questions on the implementation of the Cape Town Convention in India or its impact on your transactions, please email us at Aviation.Mumbai@azbpartners.com.