Japan’s Sumitomo Mitsui Banking Corporation (SMBC) is extending a loan of $120 million to Tata group’s Air India for the purchase of an Airbus A350-900 aircraft from Airbus. The transaction is a notable part of Air India’s extensive order of 470 aircraft earlier this year, as per SMBC’s statement.

The financing arrangement took place at Gujarat International Finance Tec-City (GIFT City), facilitated by Air India’s subsidiary AI Fleet Services.  SMBC’s Singapore Branch successfully closed the aircraft secured debt facility, with Air India contributing the equity component for the aircraft.

SMBC’s Strategic Move in Indian Aviation Market

Hiroyuki Mesaki, country head of SMBC India, highlighted the transaction’s execution through a GIFT City structure, acknowledging the rapidly growing Indian aviation market. This marks SMBC’s first aircraft finance lease transaction in such a manner.

Nipun Aggarwal, Air India’s chief commercial and transformation officer, emphasized the importance of this transaction in expanding the aircraft financing business through GIFT City, India’s first International Financial Services Centre.

India, currently the world’s fifth-largest aviation market, is witnessing expansion driven by a growing middle class. With large orders from carriers like Air India, the sector is expected to continue its growth trajectory, and the deal with SMBC reflects the bank’s interest in penetrating this burgeoning market.