Digital Scoop India Official Platform of Digital Scoop India Featuring Latest & Best News #Articles #Bytes #Entertainment #DigitalScoopMagazine
Related Articles
The board of InterGlobe Aviation Ltd, the entity behind India’s leading airline, IndiGo, has given its nod for the establishment of a financial services arm with an initial investment of INR 30 crore. The company disclosed this development in a filing to the stock exchanges.
The newly formed subsidiary will be incorporated as a Private Limited Company and will be situated within the Special Economic Zone at Gujarat International Finance Tec-City (GIFT City), underscoring IndiGo’s strategic move into the financial services sector.
Additionally, the IndiGo board also granted approval for issuing corporate guarantees amounting to a substantial $996 million. These guarantees will secure the payment obligations of the newly created wholly-owned subsidiary. While the airline has not divulged specific details regarding the subsidiary’s name or its precise function, it has indicated that the entity will play a role in the financing of aviation assets.
IndiGo’s announcement follows Air India’s recent establishment of a leasing unit at IFSC Gift City, marking the carrier’s pioneering move in this direction. The Indian government has taken significant steps to promote aircraft leasing from GIFT City by exempting aircraft leasing companies from corporate and withholding taxes on leasing transactions.
These exemptions are part of a broader effort to position India as a global aircraft leasing hub to compete with established centers like Dublin and Singapore, while enticing foreign lessors to initiate operations within GIFT City. In February 2021, the International Financial Services Centre Authority (IFSCA) unveiled a framework for aircraft leasing in India.
Leveraging insights from Dublin’s success, IFSC Gift City offers various incentives, including a 10-year tax benefit on business profits, exemption from capital gains tax, stamp duty, and GST on transactions conducted through the entity, among others. The government has actively encouraged aviation players to establish a presence in Gift City for the past two and a half years.
Gaurav Negi, IndiGo’s Chief Financial Officer, previously disclosed plans to establish a venture capital arm for the airline during an earnings conference call in August. This arm aims to invest in startups operating in aviation, consumer, and related sectors, such as travel and lifestyle, hospitality, and transportation, with an initial fund of INR 7 crore.
As of June 30, 2023, India’s largest airline boasted free cash reserves totaling INR 15,691 crore, representing an 89 percent increase from the previous quarter.
IndiGo’s strategic expansion into financial services and venture capital underscores the company’s commitment to diversifying its portfolio and capitalizing on growth opportunities in India’s evolving economic landscape.
Sources By Agencies
