While India has improved legislation to ease repossessions of aircraft by foreign owners, further work is needed to support leased engines.
That is the conclusion of Indian law firm Sarin & Co, which has highlighted a “regulatory vacuum” in India concerning spare engines installed on grounded airframes, a scenario that occurred during the bankruptcy of Go First.
In India, aircraft are registered with the Directorate General of Civil Aviation (DGCA), but the authority does not have an independent registry for engines. This means that the DGCA and customs authorities cannot command physical detachment of spare engines from airframes if lessees default, the law firm said.
“This leaves foreign asset owners trapped in protracted legal disputes before Indian courts merely to isolate and retrieve their property,” Sarin & Co says.
In contrast, aircraft lessors can rely on India’s beefed-up Cape Town legislation, and, in the event of default, trigger a strict 5-day deregistration window via an irrevocable deregistration and export request authorization.
Ultimately, this could lead to materially higher engine leasing costs for Indian airlines as lessors seek compensation for the extra jurisdictional risk.
Sarin & Co notes that in the U.S., engine owners can rely on FAA-recorded conveyancing to assert ownership of an engine and pursue repossession under the lease, bankruptcy law and other applicable requirements.
It calls an Indian engine registry the “missing piece” of a national aviation puzzle that moved closer to completion in 2025 with the protection of interests in aircraft objects act.
“One might argue, however, that the framers missed an opportunity to introduce a dedicated domestic engine registry,” Sarin & Co says.
That said, the law firm also notes that lessors might in some cases prefer not to have an engine registry in order to avoid the extra bureaucracy of having to deregister their assets at the close of successful lease terms.
Related Content
