How Adani Ports' New Unit Fits Into Group's Larger Aviation Play

Adani Ports and Special Economic Zone (APSEZ) recently established Udanvat Leasing IFSC for the purpose of owning and leasing aircraft, signaling the group’s latest foray into the aviation industry.

What Happened: Udanvat Leasing was incorporated in Gujarat International Finance Tec-City (GIFT) City, Gandhinagar, and is in the early stages of commencing its operations, as indicated in a filing on Monday. The company has an authorized and paid-up share capital of ₹2.5 crore, divided into 25 lakh equity shares of ₹10 each.

Aircraft leasing offers an alternative to outright purchase for various reasons, including practicality and cash flow considerations. In essence, a lease involves the transfer of an aircraft without transferring its ownership.

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The Larger Play: This is the latest move made by the Adani Group in India’s growing aviation sector. Its other subsidiary, Adani Airports Holding is currently managing seven airports across the country. These include airports in Mumbai, Jaipur, Thiruvananthapuram, Guwahati, Lucknow, Mangaluru and Ahmedabad.

The Gautam Adani-led group in September 2022 also extended its involvement in aviation fuels by establishing Adani Aviation Fuels, which sources, transports, supplies and trades aviation-related fuels. It also helps construct and maintain leasing infrastructure related to the aviation fuels business, both within and outside India.

The group is likely looking to cash in on the Indian government’s efforts to transform the country into a global hub for aircraft leasing as it aims to compete with established centers like Dublin or Singapore. To incentivise foreign lessors to start operations in India, aircraft leasing companies operating from the international financial services centre in GIFT City have been exempted from corporate and withholding tax on leasing transactions.

Tata Group-owned Air India also announced last month that it would set up an aircraft leasing unit at GIFT City while budget carrier IndiGo also plans to do the same. 

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