The Protection of Interest in Aircraft Objects Bill, 2025, introduced by Civil Aviation Minister Ram Mohan Naidu, was passed in the Lok Sabha on April 3, following its earlier approval in the Rajya Sabha. With both Houses clearing the legislation, this marks the second major aviation reform under his leadership.
The bill aims to align India’s aircraft leasing and financing ecosystem with global standards, providing a critical boost to investor confidence in the country’s rapidly growing aviation market.
It builds on the framework of the Cape Town Convention of 2001, which sought to simplify and standardize international leasing agreements. Although India formally adopted this convention in 2008, gaps in legal enforcement led to higher leasing costs—typically 8 to 10 percent higher than in other nations. This legislation aims to address those gaps, ensuring legal certainty for aircraft financiers and reducing costs for Indian carriers.
Emphasizing the urgency behind the legislation, the Civil Aviation Minister highlighted the vision and mission driving this initiative, crediting strong leadership for the rapid expansion of the aviation sector. He pointed to concrete figures demonstrating this growth: between Independence and 2014, the total number of passengers flying annually in India stood at 10.38 crore.
In just the next decade, that number more than doubled to 22.81 crore in 2024. Similarly, the number of airports in India grew from 74 in 2014 to 159 in 2024, with two more set to be launched soon.
The minister also emphasized the significant increase in the number of aircraft, from 340 in 2014 to over 840 by 2024. He stated that no other country has witnessed such rapid aviation expansion in such a short period.
The bill is expected to streamline leasing processes, make India a more attractive destination for aviation investments, and improve the country’s compliance scores under the Cape Town Convention. These changes are essential for reducing airline costs and encouraging new entrants into the sector.
Discussions on the bill also touched upon broader challenges in the civil aviation sector, such as the high cost of Aviation Turbine Fuel (ATF), which accounts for nearly 45% of an airline’s operational costs. The minister expressed concern over the variation in ATF tax across states and urged more states to follow the example of those who have reduced their rates. Lowering these taxes, he argued, would boost regional connectivity and reduce costs for passengers.
Looking ahead, the Ministry of Civil Aviation has set ambitious targets for sustainability and capacity building. Plans are in place to generate 2.5 crore liters of Sustainable Aviation Fuel (SAF) by 2025 and transition over 100 airports to renewable energy, underscoring India’s commitment to greener aviation.
The sector also faces a growing demand for trained pilots, estimated at 30,000 to 34,000 over the next 10 to 15 years. The government is working on increasing the number of Flight Training Organizations (FTOs) and issuing more commercial pilot licenses annually to meet this demand.
