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Global watchdog Aviation Working Group (AWG) has issued a positive watchlist notice in their CTC compliance index with a projected increase in India’s score, which comes as a positive step towards ease of leasing/financing aircraft equipment to India’s commercial airlines such as Air India, IndiGo, Spicejet and Akasa.

The development comes in response to notification issued by the Central government, dated October 3, 2023, providing that the moratorium under the Insolvency and Bankruptcy Code, 2016 will not apply to aircraft, aircraft engines, airframes and helicopters governed by the Cape Town Convention.

AWG, a global watchdog representing aircraft manufacturers and leasing firms, had put India on a watchlist with a negative outlook in May, saying the country failed to comply with international aircraft repossession norms after foreign lessors were unable to recover their leased planes from Wadia Group-owned bankrupt airline GoAir.

The government's notification to exempt transactions involving aircraft, aircraft engines, and helicopters from the Insolvency and Bankruptcy Code (IBC) was issued in consonance with India's international treaty obligations as the country was a signatory to the Cape Town Convention and it Aircraft Protocol (CTC).  

The Cape Town Convention is a global treaty designed to increase financing and leasing of aircraft, engine and spare parts by reducing a lessor's risk and by enhancing legal predictability in these transactions, including in the case of an airline's insolvency or default.