In episode 7 of Flightpath with Alok, Alok is joined by Dr. Vandana Aggarwal, who superannuated from the Indian Economic Service, having last served as a Senior Economic Adviser, in the Government of India’s Ministry of Civil Aviation. Dr. Aggarwal currently serves on some high-level governmental bodies, that is, a Member, of CSIR-NAL Research Council for Development of Aviation and Aerospace Sciences and Technologies; (b) Lead Expert for Course Consolidation at the Indian Maritime University; (c) Chairperson of the International Financial Services Centre Authority (IFSCA) Committees for seeding greenfield businesses in India’s GIFT-City, including Aircraft and Ship Acquisitions, Leasing and Financing under Project Rupee Raftaar and SAFAL. In addition, Dr. Aggarwal serves as an Independent Director on the Board of M/s. Blue Dart Aviation Limited, India’s longest-serving private cargo airline. She has majored in Economics at undergraduate and postgraduate levels and holds a Ph.D. in Finance wherein her thesis was on Investment and Regulatory Aspects of Deep-Sea Mining.  Dr. Aggarwal gives us some fascinating insights from the perspective of being a career civil servant and economist in various Ministries of the Government of India for over 36 years.In this, the 7th episode of Flightpath, we are given glimpses from behind the curtain on the workings of government in conceptualising, designing, and implementing public policy reforms. The focus will be on the topic of innovation and strengthening of aviation-related regulatory regimes in order to successfully and swiftly establish India as a globally competitive commercial aircraft financing and leasing hub.If you are wondering whether a career in aviation is for you, and in particular if India will provide you with the opportunities you seek, then this episode is certainly worth a listen. Linkedin: https://www.linkedin.com/in/alokanand23/ Watch our video podcasts here: https://www.youtube.com/flightpathwithalok Instagram: https://www.instagram.com/flightpathwithalok Podcast: https://linktr.ee/flightpathwithalok Produced & Distributed by Spooler https://www.spooler.in TranscriptAlok: So, after scouting the globe the last many months, and speaking to a lot of senior leasing industry executives, I’ve finally managed to request and get time from a senior bureaucrat of the Indian Civil Aviation Ministry, an ex-bureaucrat, if I may just add. However, who is not in the mould of a typical bureaucrat, one that I’ve ever known. Her name is Ms. Vandana Aggarwal. Or rather I should say, Dr. Vandana Aggarwal. And she has played a key role in setting up the policy, and bringing about the rules and regulations and changes in the Indian Aviation space, specific to aircraft leasing and financing. Welcome Dr. Vandana. It’s a pleasure to have you in the show. Dr. Vandana Aggarwal: Thank you, Anand. And to all our viewers, Anand is a ragtag whom I know for the last five years. I call him a ragtag simply because he's irrepressible, not for any other reason. I mean it in a nice positive way. So, well, presently, I'm holding a few positions. I'm member of the Research Council for Aerospace and Aviation of the Government of India, which is a high think tank on both aerospace and aviation matters, a small but high think tank, level think tank. The other is that I'm a member of the advisory councils for Indian Maritime University. I'm also a lead expert for them on course coordination. And finally, I'm also an independent director with Blue Dart Aviation, which, as you know, has been India's, was India's sole cargo carrier and for the last 27 years of its existence, has been profitable each year. Right through COVID and right through the global financial crisis as well. I'm not sure whether there are many cargo carriers which can boast this record. I also continue in two capacities which is as chairperson of the IFSC authorities, that is the International Financial Services Centres authorities committees which were set up, one for aircraft financing and leasing. And the report was presented and the ecosystem that has been developed is a result of that committee's work. So although I say it's an IFSC authority committee, so the implementation is happening through that, but the committee was actually set up by the Ministry of Civil Aviation under a project called Rupee Raftar. The second committee which is an IFSC authority committee of which I also chair is called the SAFL committee acronym for Ship Acquisition Financing and Leasing, again from Indian shores. These were two speciality financial services which had fled Indian shores about four to five decades ago. And we have been now fairly successful in bringing these back to the Indian shores. I did my schooling both in India and in England. I did my O levels, A levels in London. I have done my masters, BA Honours and Masters in Economics. That was from Delhi School of Economics. I'm a PhD in Investment and Regulatory aspects of deep sea mining. So it's a fairly eclectic mix of academic qualifications. I immediately went into the competitive exams after my Masters and I got into the Indian Economic Service, which is a specialised economic administration services. They recruit only about 15 people a year all over India. And we get assigned only to the economic administration desks in the center by and large. So there are very few of us and as I said it's a very specialised field. I have been very fortunate to be a part of the core economic reform team of India right from the onset. So the 1991 Indian Industrial Policy Reform under the Manmohan Singh's finance ministership and Narasimha Rao's Prime Ministership, which started the economic reform journey. So the Indian industrial policy reform was my dossier. I worked on it along with Dr. Rakesh Mohan from the Ministry. And we have written papers also on that subject. Fiscal reform, industrial, the indirect taxes reform and then capital market reform so I was shunted to finance Ministry thereafter too. So I was moved around basically to handle different segments of economic reform in. So we did the first ratings upgrade after India was jump upon status virtually. So that was also my dossier. We got the first double upgrade from Moody's and from S&P, a single upgrade. And then India went on to do many things thereafter. So it has been, I was then sent to commerce Ministry because that's where the trade policy reform was happening. And I was handling the WTO, World Trade Organization Desk, where we were doing investment related, trade related investment measures. We were doing competition policy, government procurement, trade facilitation. We were handling the first intergovernmental disputes and India, I don't know, we attracted the first, you know, 11 disputes in the first year of the WTO's existence. So dispute settlement was my dossier at that time as well. And we managed to have consensus or we didn't go to the actual, we did it at the arbitration on the consultation stage, we settled matters in seven of them. So, you know, things went on and I was then brought, I went as India's negotiator under the Doha development agenda to Geneva at the World Trade Organization. I was in the permanent mission of India. When I came back again, The Doha development agenda was continuing till 2008, when I think most people called it a pause on it. And then I went to infrastructure development. And the first PPP, Public-Private Partnership, in power transmission, I prepared along with my team. And we prepared the documents, the model documents. And it was an extremely successful PPP in a monopolistic, natural monopoly, which is a transmission network. And that also in a country like India, where you have so many distributions between the center, the states and the local bodies in terms of public, in terms of power itself-generation, the transmission and the distribution. Distribution is usually with local governments. So it was a very interesting way exercise that I thought. And then I was sent to the Cabinet Secretariat where I was handling many important issues including security related matters, political affairs, external affairs. And then I came to environment and forests and climate change and the UNFCCC and many other environment related issues. And when I say I came, it's usually a progression. You move on promotions by and large under the government system. And from environment, I came to civil aviation. And that was in May 2017. So I can just say that I am actually a baby or a school student where civil aviation is concerned as a sector. Alok: I recall when I first met you, ma'am, in Safdarjung DDC office. You were there in a special position and you had informed us that you have been put there on behalf of the Ministry of Finance. It was a very interesting dynamic, what I understood that time. I was first time hearing about a role like that, kind of like a bridge between the Commerce Finance Ministry and Civil Aviation Ministry. And I think you took up Project Rupee Raftar right after that, if I recall. And as a result, we are where we are today in terms of a lot of initiatives taken in the aircraft financing leasing space. You know, it'll be good to know what was the thinking behind, if I may say so, a kind of a radical move on behalf of the policymakers and also, how did you think your role evolved in terms of your work in the Civil Aviation Ministry? Dr. Vandana Aggarwal: So my career progression has completely been dealt with by the Department of Economic Affairs, Ministry of Finance. So they have, as I said from day one, put me as part of the core economic reform team or so I think because everywhere I went it was on a new assignment and you know now you have to deal with this. So let's work. It's not as though I was doing it alone. I was working within a hierarchy in whichever Ministry I was sent to. So it's not as though I don't want to self glorify myself or anything. It's just that the cardre, the Department of Economic Affairs, post you and they posted me in Civil Aviation when, as you know, the growth of the Pax sector was already in double digits. And I think there was a sense to capitalise on cargo as well to bring it up to speed. So among my first three assignments in civil aviation was air cargo, you know, come out with the new air cargo policy, which we did in 2019 in January. And then skill development in aviation. And finally, it was all tax matters. As you know, first of July 2017, the GST Act came into being and the aviation sector had a huge number of issues. And so my time from about 15th of May till about mid October was taken almost entirely in handling the GST issues. And we were able to correct so many things that I can share, you know, at least one of them, which will make a lot of sense to the readers here, or listeners here, that aircraft was not classified as a mode of conveyance. So as a good under the GST Act, every time an aircraft moved across borders, state borders, interstate borders, it would have attracted GST for the next state and the next state and the next state each time it did. Alok: This was which year? This was which year ma'am sorry we're talking about? Dr. Vandana Aggarwal: 2017Alok: Wow as recent as that okay. Dr. Vandana Aggarwal: As we said, GST came into being on 1st of July 2017, but the drafting had been done a little bit earlier, but somewhere somebody missed this aspect that an aircraft is not a good, it's a mode of conveyance. So when I was looking at the issues and I said, my God, and we calculated the amount of GST the aviation sector would end up paying just on movement of engines. Obviously, every airline is not going to stock an engine for each type of aircraft at each of its, you know, origin and destination airports. So, you know, they move spares as a matter of routine in the belly of an aircraft. So even then, and even things like stationary or if an airline is to move it's cutlery, crockery, any kind of thing, that would have been seen as goods movement. But then we worked very fast with the Ministry of Finance and they were very forthcoming, they were very receptive to changes which you could rationalise and present to them. And we I think, we were able to secure, on the GST front at least 80,000 to 1 lakh crore of GST benefits, not benefits but changes so that the Indian industry, which didn't have a turnover at that time, its turnover was 85,000 crores so you can't have a total GST out go which is going to be more than the turnover of the Indian domestic. So we were able to do that. That was a very interesting time. And you know GST was a new act that was coming in. And there was complete readiness to accept that not every sector could be covered to the last dotting of the I and crossing of the T. And then, as I said, around mid-October, we started looking at what else was missing in aviation which needed to be addressed. And I was looking for finance. I don't know whether it's because I'm a baniya or what. I said, where's the money? Where's the money? Where's the money coming from? Where's the money going? So whether it's airport financing, whether it's aircraft financing, I couldn't find aircraft financing or leasing anywhere in India. And even though 80% of the aircraft were all under lease, but they were all coming in from offshore. So I went to the Secretary and I said, I can't see aircraft leasing and financing either as a portfolio with any officer, nor do I see it reflected in our reports. So he said, yeah, go ahead, work on it. Tell me what needs to be done. He was such a wonderful officer, and so forthcoming and so were the Ministers and when we took up the first draft of the concept to the Ministers they were just absolutely stupendous and they said this is fabulous just go ahead work on it. And we worked on it so we came out with our report which was accepted in January 2020 and in no time at all, we had the Finance Minister accept our recommendations on an overall basis and a secretaries level committee was constituted to pick up all our essential and core recommendations and work on those so that there were different ministries that were involved, corporate affairs, commerce, you know from SEZ. You had the Department of Revenue, you had so many others in the play, including our own Ministry. And we worked on at breakneck speed to put in the raw framework. In October 2020 itself, the IFSC authority was set up because one of our recommendations was of a unified and dedicated regulator which would combine the roles of, in fact, we were the first ones to say that the IFSC Gift City is the platform that should be used to bring in aircraft leasing to India. And as you know, GIFT City had actually been set up in 2013. But it would not be an exaggeration to say that aircraft financing and leasing this initiative which the government picked up and, you know, it put all its weight behind this initiative. The speed and the total nature of changes is so enormous. We were building a green field industry in India initiative from a zero level to, as I said, we now have 24 lessors and the 24th lesser is actually Air India. So we should now see a huge amount of propulsion. So till now it had been the non-scheduled operators which had been our business aviation jets which were coming in. But now I think we should begin to see scheduled operators also. Indigo is also mulling on it. So is Akasa Air. And they have also been in discussions with IFSC authority. So I think the initiative is proceeding well. Alok: Let us drill down on that a little bit. That is a good point you made about Air India and other airlines coming in there and setting up shop. If I'm not wrong, the way I understand a little bit of this structure is that if Air India or let us say any Indian operator XYZ sets up shop, that essentially in effect becomes a pass-through arrangement where they will be acquiring the asset on lease themselves, because most of the Indigo and Air India airplanes are also not the current order book or even the future order book is planning to be leased actually not purchased. That means they are leasing it and they are subleasing it internally to their entities or the operating entities within India. I'm sure there are tax and jurisdictional benefits to it and that is the main reason why they must be doing it. I think we will just come back to this but when you were setting up this whole program, this whole policy and etc. or getting this industry up and running, if I may ask you what do you think was the biggest challenge which you had? Which you feel, the reason I'm asking that is because that could form the basis for future learnings when similar attempts are made or efforts are made in this industry or other industries in future as well. That is one reason. And also, please share, how did you overcome it? Dr. Vandana Aggarwal: So the two, when we had in writing the report, Rupee Raftar, we had looked at what were the main roadblocks or what were the attractions of the other global hubs, whether it's Dublin or Singapore or Hong Kong or Tianjin or whatever. So we were looking at comparing, we did a competitive cost estimation of each of these hubs vis-a-vis say a gift city, IFSC Gift City and what would be needed to make Gift City more than competitive, giving it an edge in terms of sheer costs. And that was the tax regime. And usually, industry ask is always on the tax regime. So both direct taxes and indirect taxes were our first focus. And we didn't want to present a wish list kind of scenario where we had not done our estimation. I you know the objective was that the all-in cost from IFSC GIF City has to be lower than significantly lower than the all-in cost a lessee or a lessor will find both. We did from both perspectives from say vis-a-vis Dublin or Hong Kong or Singapore and Dubai and we did we did an assessment with the top five leasing hubs of aircraft leasing hubs. So that was our first challenge that how do we get the go-ahead from government on the tax changes or tax breaks which are needed. The second was which we saw was regulatory. I know you asked me for one but if one of them is not addressed the whole purpose would have been defeated. And we needed to put in world class kind of regulations. And hence, for instance, a dedicated, unified regulator, which is unique in the world. So it's a single window concept with a difference. Normally, we understand single window to mean, Ok, you've gone to one window. That window is going to send it to the next window. And there's a third window. And so, you as a customer are approaching only one window but there are multiple windows which will be handled but they will be handled sequentially. And at the end of the day you will be given a result but we said no. When somebody has submitted it there is the regulator is a combined regulator of RBI, of SEBI, of insurance, of the provident fund, of the SEZ, and this combined regulator or a unified regulator is sitting and giving you the final approvals without somebody turning around and saying, no, this doesn't suit me. No, no, they have to look at the overall picture and then give the approval. So, for instance, I'm told that the Air India approval came within seven days, I mean, the regulatory approval. So that is a fabulous telling on how swiftly government moved on the regulatory front. Now how did we manage it? So one was there were certain taxes that were state government taxes and there were certain taxes which were central government taxes both on indirect and direct. So state government was stamp duty for instance of all the documents that have to be registered and our recommendation was to make it nil for the initial first 10 years at the very least and we approached the government of Gujarat. And they were very eager and they swiftly moved the cabinet note and went through their assembly process etc., legislative processes and we had a verdict very quickly from them. On the central taxes as I said it was not just taxes it was also changes in corporate tax for registrations etc. of lessors, the LLP etc So you had certain structure and we in commerce Ministry work very closely with the IFSC authority as well as with the Gift City administration as a troika to work with all the other ministries. The most important thing that I think when you said what is it that worked miracles for us? We worked out exact language changes to the acts or the sections in the rules and in the laws that were required. So that, you know, it's not as though we said, remove stamp duty. No, we gave actual language in the Stamp Duty Act to say, section so and so is to be changed to read as follows. So that there is no slip between the cup and the lip in the understanding of what the ask is. So we could have meant something. But the implementing government, which is either commerce Ministry or Finance Ministry, could have understood our ask in a different way. So we, as a committee, we worked out the precise draft and sent it to each of the ministries in advance so that they could work on it. And also, I held a number of consultations with these ministries before the release of the report so that we had them already on the page with us. So there was nothing we were telling them when the formalization was happening and the government had accepted the initiative and the recommendations at a broad level and said okay implement all the essential ones immediately and we'll come to the others in due course. So essentially everything was done only a few attractions are left when those can be handled. They're not compelling ones in that sense. So there was, as I said, consensus virtually in our consultations with different ministries. We had the language completely done so that there could be no misunderstanding or no exchanges of drafts going back and forth, back and forth. So we saved time on that. And finally, what I had very briefly mentioned. The government at the highest level set up a committee of secretaries and I used to process that committee. We used to have their meetings and very fast-paced decisions because this was at the topmost level of the bureaucracy that you were. Everybody wanted this initiative actually. So we were in a good world. Alok: If I may ask now at this point of time, you mentioned that during the course of the study, you took references from other centers of excellence around the world in terms of aircraft leasing. I think you mentioned Singapore, Ireland, and you Dr. Vandana Aggarwal: Dublin Alok: China, Dublin. Dr. Vandana Aggarwal: Yeah. Alok: So one of the things is one example we always speak about is, and we don't have to emulate everything which every country is doing, every country has their own economy and their own way of working. But if we talk about this particular part of the industry, what do you think now to the stage where we have reached is great, but now to go to the next level, to be able to because if you look at the Indian aviation today, in the recently concluded Paris Air Show, India Indian Airlines were the biggest order book airlines. They announced some of the biggest orders. The orders by Indigo and Air India dominated the show. Nobody else ordered more airplanes than between these two. In fact, Indigo is now having a 1300 A320 family order book. By order book alone, they are the world's biggest A320 family operator. So obviously there is a massive opportunity. I'm just wondering, what needs to be done now from your perspective, what you think should be done now to take benefit of that, to take leverage of that, so that India can also have a fully organic international aircraft leasing setup here, which cannot only cater to the Indian market, which obviously is a driver of it, of this kind of industry. But also be a global lesser, like what has happened for example in mainland China, over the last two decades the lessors which have come up there have now are counted among some of them are counted among the world's top 10. So I think I'm not saying that we have to do it the way they have done it. That's not what I'm at all saying. I'm just wondering what should we do for our requirements to be able to also have that level of success. Dr. Vandana Aggarwal: Yeah, so, Alok: What do you think? Dr. Vandana Aggarwal: Okay. Yeah, so this air show is not the only one Paris Air Show is not the only one where India gathered the headlines. I was there in the 2019 Paris Air Show just pre-COVID as well, where the first announcement with President Macron present was of Indigo's 20 billion engine order. So, 20 billion dollar engine order. So, you know, that was also the headlines. So, India has, Indian aviation is making the headlines at the global platform for some years now. And I do believe that India's aviation is punching way below its weight. So, the aircraft order is symptomatic of the low penetration, Pax penetration and cargo penetration, whichever way you look at it, of the Indian population itself. You know, it's I think the aircraft penetration, Pax penetration is about 12 percent, which means only 12 Indians are taking one trip a year in an aircraft and that's very dismal. You have a middle class which is the largest in the world and which is very prone to travel by air. So you know the aircraft penetration or the Pax penetration can only grow and grow and grow and that is why these airlines have placed such humongous orders straight after Covid. And you know the Indian story is actually half-told because we didn't in the government, I can't speak for the government in totality but as since I'm not now a part of it but I was there, and when during the COVID period the world over airlines were getting billions of dollars worth of treasury support, treasury back support. In the Indian aviation sector we didn't give treasury back support because we were so busy to other needy causes and you cannot take away from the poor farmers or from the poor labour migrants whom we saw or the small scale sector which didn't have the wherewithal to weather one month of shutdown, what to speak of such a long shutdown on account of COVID or disruptions in activities. So, Indian aviation had to make good its own ability during this period. Yes, we came out with a couple of schemes later on but that came much later on debt financing. Alok: Extended credit guarantee schemes. Dr. Vandana Aggarwal: Yeah, credit facility. Alok: Yeah. Dr. Vandana Aggarwal: So, we did do something for them and that was good. It was needed to be done. But I'm just saying there was a lot that had not been done. Secondly, the entire ecosystem which surrounds airline operations, that is also below par in India. What do I mean? I mean, I don't need to tell you you're such a technical boss. MRO operations from India are we punch well below our weight. India produces the highest number of engineers in the world annually and can you imagine we don't do MRO here. We have for instance the largest world's largest shipbreaking sector here with full ESG. Where aviation is concerned we just did two boneyard operations on a jet 777ER. during the COVID period, they were lying in Chennai. And that was a successful operation, mind you, very cost-effective, but successful operation. But until we become part of the IA, RI, et cetera, you know, there are all these little big boy clubs until our entities, yeah, it's, you know, an exclusion. It's a barrier. I have no hesitation in saying that. These are little big boy clubs, school tie. You don't want girls in there. So when I say girls, I mean, you don't want others to come in. You don't want a breath of fresh air. And India is an aviation, what to speak of breath? We are going to be the life support breath for global aviation in the times to come. Because we are growing because of a need to grow. We are growing on competitive terms, you know, there had been some talk about duopoly, etc. India will always have because we are continental in size, we will always have multiple carriers. Today, if you look at even cargo from one airline, cargo airline, we are now three cargo airlines. Indigo has an order for 10 conversions from Pax to freighter-P2F conversions. Sorry, we have four express because Spice Express is also there and you have that Amazon airline which is which is serving Amazon and you have one more Pradhanair. So there are Alok: You’re talking about QwikJet, and Pradhanair Dr. Vandana Aggarwal: Yeah, QwikJet, and Pradhanair. So we've got four cargo airlines at the moment from one. Alok: There is one more starting from South India soon. Dr. Vandana Aggarwal: Yeah. No, no. So I'm saying, can you imagine the competition is going to increase in cargo airlines, but it's gonna decrease in pax. I don't see that happening because the market is expanding. If the market were sort of reaching a plateau then the airlines would fight amongst each other and just have a duopoly. But yes, we're going to have two big players and we're going to have multiple others who will be serving either regional or niche sectors or some other. I'm sure the business models are being worked out even as we speak. So I don't want to press on that point. Alok: Ma'am, so fine, I understand what you're saying. And I like the way you are totally positive about this. Frankly, so am I, and everyone who is a participant in this industry has to be. Dr. Vandana Aggarwal: You know, you can’t but be positive. Alok: I amDr. Vandana Aggarwal: Your question was that what do we do for attracting more? I'm telling you, the government has preceded industry demands in setting up this system. Far ahead of industry demands. I told you, one of the two big guys are already in-scheduled operators. The second one is in discussion. The third one is also in discussion, Akasa Air, I said. Now, did we set up a system, where the government has to pull everybody in? Or is India a model for this world where industry rules, unlike China, where the government decides what needs to be done? So government has put in place an ecosystem. Alok: Ma’am, you’re right. Dr. Vandana Aggarwal: No, I think this is a point. Like we are a democracy, we like the competitive strength of our industry. And that is why under COVID we could survive, because they were competitive to the end of the day of a crisis. Nothing could be better than that. So I will not hear a single thing negative about this equation. I have to come back for this.  Alok: I am not saying anything negative, I am actually trying to find out ways to fast track things. So I was Dr. Vandana Aggarwal: No, I’m also going to give you one more sentence. Alok, I'm going to give you Alok: Yes ma'am. Dr. Vandana Aggarwal: One more sentence. Normally, it is said proof of the pudding lies in the eating. You have 54 engines. An engine is half the cost of a plane. Alok: Yes, I'm aware, I’m aware. Dr. Vandana Aggarwal: Which have already been leased out from Gift City. You have 12 aircraft, which have already been done. And I already gave you about the ground handling equipment. Already in the smaller tiers, who do not have risk-taking ability, have taken the risk and set up shop in India, not just to service India, but also to export from India. A couple of the engines have gone out as well. So India's IFSC Gift City is not an inward-looking hub. You look at it, as I said, it's competitiveness, it's regulatory ease, its financial ability. You can access all capital markets from IFSC Gift City because FEMA, which is the Foreign Exchange Management Act, is not attracted. You can deal in dollars. You can deal in any currency. You can have your administrative expenses in rupees, which are very low. You know. And the overall cost, as I said, is 30% cheaper in doing things out of India. Alok: You're right. You're absolutely right on that. Dr. Vandana Aggarwal: And the regulatory ease will be more for the lessors who set their shop in India, the financiers who set their shop in India. You know, you will find the Indian courts are also more at ease with players who are coming from India, who have invested in India. Why should they look favourably at people who are not investing in India? Alok: Uh, Okay. I will edit that part out. Dr. Vandana Aggarwal: But no, you really shouldn't edit that part out. Alok: That's a bit too emotional. We should edit it out. Believe me. Dr. Vandana Aggarwal: No, no, it's my take. Why should you edit it out? Alok: Just joking. So Ma'am, I understand where you're coming from. I think you also know where I'm coming from on this. There are just two things if I may add as disclaimers to all the positive things you have said, which is actually I 100% agree with. There are only two factors which I want to emphasize on. And it is not necessarily going, you know, it is not something which will happen right now. It is and I'm aware, very well aware, these are also work in progress. One of them is, see one common factor when you look at all worldwide leasing centers, and this you can actually listen to it some of my previous episodes with other industry executives I've spoken to. Two things which have come out, and this is six, seven people prior to your recording I have spoken to who are from the industry. And they are all having an interest in India, I believe, because they all have assets leased here. So obviously, their interest is also that the Indian economy remains robust. It is in their interest. The more robust the economy is, the more the airlines flourish, they will get to lease more airplanes here. So I do give credits to some of the opinions I have heard. Two things among many things I have heard which stand out for me. One is, it will help going forward if the capital availability is made at par with the rate of capital and ease of accessing capital, what is in other centers of excellence, like in Dublin, China and even Singapore for that matter, are ahead of us, it seems so far. Number one. Number two, I would say, the other factor which plays a key role, which you have also touched upon, is the ease of doing business. When you say single window clearance, and this I am purely saying by my own first hand experience in dealing with the system. It is definitely far better than what it was. But it has not achieved the, still completely achieved though as I am adding a disclaimer, I am aware it is also happening soon. There is things happening which will achieve that too. But these two things having been achieved in the near future will really help in my opinion, to even fast track our ambitions in this. That is all I just wanted to add. Dr. Vandana Aggarwal: On the first one, the affordable capital for the entire order book of India, which is the third largest in the world, it may have even now become the second largest order book in the world. I think this is a complete red herring. Global capital is going to be financing at affordable rates India's acquisition of aircraft, whether by leasing or by any other SLB or whatever, maybe the mechanism. So this is India's global center whereas I already said, Global capital is free to come in. There are more than 18 global banks which have already set up shop. We have been in touch with them. Some of them have been financing aircraft directly as well in the SLB operations. So I see no reason why they cannot do it for a lessor out of India, when the lessee on the hand, the risk assessment of theirs is the same. The capital is global capital. The risk on their capital is the same because it's going to an airline, regardless of where the hub is. Alok: Can I just comment there? Dr. Vandana Aggarwal: But here, all in cost is better. The EODB is better. Now you ask me, then I'll tell you. Alok: Yes, so I was just going to add one line in between, sorry to interrupt you, is that I think one of the reasons you are saying why the Indian banks or even the Indian branches of foreign banks, so to speak, are why they should not do it, there is no reason. Actually there is one reason what I am aware of and I think this is something you have also pushed on a lot in your tenure, which is changing the rule in the Reserve Bank of India where the equipment leasing clause still does not cover aircraft. I'm simply saying this by first-hand knowledge of speaking with various bankers in the industry last few last one year or so. Whereas, you know, our company is also trying to take steps in this direction. And one of the things they have told us is, apart from the other reasons, which I don't want to go into, but the one of the main reasons which they show us is that RBI rules. And as I'm again emphasizing, I'm aware that it is also a representation which has been made to the Ministry of Economics and Finance who we are hoping will soon change these rules also. I hope they do, but what I've heard so far is the RBI regulation also has a certain restriction for the banks to be able to do it directly. Dr. Vandana Aggarwal: Let me put it like this. Where operating leases and where financial leases are concerned, there is a slight nuance in the RBI regulations. If an Indian bank is to take up leasing on its shores or setting up its own subsidiary. But if an Indian bank is financing another lessor, who is registered in Gift City, there is no regulatory impediment other than the hesitation on the part of the Indian banks themselves. Now, which business model tells us that just because in another large country, their banks set up their own leasing subsidiaries, India has to follow necessarily that business model in order to succeed? Alok: But they don’t have to Dr. Vandana Aggarwal: I am confident. Yeah, exactly, because the kind of environment we have created is such that Indian capital now will, it will begin to come in. You will see by the by increasingly one because administrative expenses which are pretty large, your costs of arbitration which can now be done through gift city itself because the SIAC has been expanded and you know all your arbitrations can be done. So all that Alok: Singapore, you mean Singapore Arbitration Center? Dr. Vandana Aggarwal: Yeah, Singapore Arbitration International Center. So the tie-up has been expanded and now all arbitrations can be done from IFSC GIF City. So these are hefty expenses you can budget them now entirely in rupees. And there you don't need an RBI permission to do that because that is a part of your normal capital needs working capital and others. So I'm just saying by enabling financial leases in May 2022 in the Gift City, we have ensured that both operating and financial leases can work. Our banking sector, SBI, has shown in the last quarter a profit of nearly 50,000 crores. Now it has money. I'm sure it's looking for avenues and it is now for you guys to go and grab that money. It's not for government to tell you that go grab that money. I think the Indian industry, why Indian industry? The global industry, finance industry is not looking at where money is available at good rates. You see the way the Ambani's finance their oil tankers, fabulous rates they got. Why is it that aircraft which are also mobile assets, why is the shipping sector taking a march on the jet sector? It's simply because the aviation sector is full of players with entrenched protectionist interests. They don't like a whip of good air and that air is coming from India. Alok: I am going to be neutral on that but I am going to go on and I want to go into more I would say even more controversial subjects which I am sure you will not hold back in giving your opinion. Dr. Vandana Aggarwal: Please ask. Why should I? Alok: So, Ma’am do you recall in your tenure the jet bankruptcy, Jet Airways bankruptcy took place. Airplanes were repossessed. I recall firsthand you played a key role in assisting many lessors on behalf of the Ministry, for them to be able to have their rights executed on access to assets. Let me tell you right before that a few years back there was Kingfisher Airlines bankruptcy also, obviously which you know. What I'm trying to tell you is I had seen that also firsthand. Obviously at that time the situation was very different. India had just ratified the Cape Town Convention in 2009. And during the time of Jet Airways, while Jet Airways bankruptcy was unfortunate, but fortunately for the lessors, India was a full signatory now to the convention. And then in between, I think Spice Jet had a near-death experience. Again, some assets were repossessed. I do recall us meeting you a few times on behalf of certain lessors, where certain policy matters were discussed, sometimes representations were made, and you gave us a very patient hearing. You know, and then now, unfortunately, what I'm seeing is, Go First is now going through a bankruptcy process now. I would just like to summarize my understanding of what this is. So India is a signatory to Cape Town Convention, but as you are very well aware, there is a Cape Town Convention Act, which the Indian Parliament has to enact. That has not yet happened. Now we are hearing that they are trying to get it done in this monsoon session. I don't know if it will happen this session or next session, but it is in the works. And then the IBC Act is already in place, NCLT. As per that, what the courts are doing right now, as you are very well aware from the news is the courts are taking the certain, the court is taking an opinion which is neither giving full rights to lessors. And it is to a certain extent favorable to the asset being placed in India, though Go First, current the old owners don't have access to their company anymore in that sense. It is under a resolution professional now. But from the lesser's point of view, the solution to this, in my opinion, cannot be just an Indian industry because that will take time, it will all happen. But no matter how big an Indian innovation leasing industry we build, we will still be a global industry, we will still need collaboration and support from global leasers also. This is one thing I'm just wondering how this has happened because when Jet Airways was happening it was a totally different story. I remember in a matter of record time we were able to get IDERAs which is the irrevocable rights of the lessor, the power of attorneys they get, where they get to repossess their assets, get the air planes de-registered. But now IDERAs have been put on hold, the matters are in court and I'm just wondering now I mean, surely you will agree with me that this is a bit of a step back for the industry because the lease rates and the credit profile will be in question now for the other operators for no fault of theirs from India. Dr. Vandana Aggarwal: So I will say first two things, which I think all global financiers and lessors who might be gnashing their teeth at the moment should keep in mind. Actually three things they need to keep in mind. Alok: Right. Dr. Vandana Aggarwal: The first is that India has never been a financial defaulter in its entire history. And that I mean, whether it's on World Bank loans, whether it's ODA-the official developmental assistance, whether it is commercial debt, etc., we have never defaulted. And here also, I don't see us going into default. The second thing is that one swallow does not a spring make. One airline of India which has gone into bankruptcy, and there are certain a few aircraft which are held, does not give the India picture to that extent. The AWG was very precipitate in giving us a negative outlook immediately. That was so precipitate. Alok: I'm just clarifying, you mean aviation working group of the aviation. Dr. Vandana Aggarwal: Aviation Working Group. I mean, when there were 123 aircraft of jet airways, which overnight came to be grounded. There was no downgrade because AWG understood that the government does not mean to keep those aircraft on the ground. Government wants those aircraft in the air. The optimal time for an aircraft to be in the air is 12 to 13 hours. We wanted that and government moved on that premise alone. And why? Because everybody in the chain benefits. The financier benefits, the lessor benefits, the airline benefits, the airports benefit, everybody benefits. But when you do something like this, which is only to the benefit or you are looking only at a lessor or a financier's position and then you are putting a negative this thing on the negative watch list. It has not looked at the huge humongous orders of India and what impact is going to add. Or maybe, maybe they are doing it on purpose because then this jacks up the risk for Indian airlines to pay and that fatten the financiers and the lessors, and perhaps also the OEMs at the cost of India, or Indian taxpayer and Indian passenger. I don't think this serves any purpose. You have to look at the entire chain and make sure, that's why regulators, that's why standardizing agencies, that's why governments have to be very wise. They cannot be precipitous in what steps they take. I think AWG should review its position immediately. The third thing-the aircraft at issue, the courts are seized of the matter. They have already allowed MRO related access to them. Allow a little time and this will also be handled. Where is the problem here? How did the problem start? Did the problem start because Go First was not in a position to fly its planes? Yes, of course. Go First was not getting the engines, and both the contracts were faulty. So when parties enter into contracts which have clauses which are self-serving, what do I mean by that? The guarantees that were given and were accepted by the lessors were land-related guarantees even though this is asset-backed financing. So the airline has gone into litigation on account of the guarantees as well. So I'm just simply saying that you must negotiate, the third point, you must negotiate your contracts in a proper spirit so that the Cape Town Convention obligations are upheld by both sides. The responsibilities and rights accrue to both, the airline as well as to the licensor or the financier or the equity holder. So you know you have to play the game correctly. Somewhere in this Go First case the matter is not so simple. Alok: That's what I'm trying to wonder. I'm wondering the same thing because Jet Airways, there was the same IBC Act. Dr. Vandana Aggarwal: No, no, Jet Airways was a pure simple financing matter. The company said we have a certain amount of debt, we can't discharge that, you waive off that debt, State Bank of India, XYZ, etc., and we will be able to go into position. It was a matter between one or two entities. It was between the debtor and the creditor. Alok: But they went under NCLT process? Dr. Vandana Aggarwal: One minute. Here there are multiple players. There is an OEM, the engine OEM, who's not willing to provide the engines because you know your last podcast with Avalon's technical chappie who said that there are problems with PW engines and timelines they're not able to meet , etc. So that is a problem. So you bring in one more player into this dispute. You have others who are also there in this dispute, including those who contracted these engines and how the guarantees were given on the aircraft as well as the engine. So you have multiple players over here besides the airline. So this is a slightly more complicated game. We are sorting it out. India always sorts it out, to the best interest of all players. Rest assured, no lessor, no financier is going to suffer. The Indian market and the strengthening of the global market from India, both are going to benefit from it. And we are not unmindful of this. The narrative has to change. It is not India's fault here. Alok: I'm not saying that it is India's fault anyway. It's a private company which is going through. So I was only drawing a comparison that the same two acts are in play which is one is the bankruptcy act which was there in the time of Jet Airways and one is the issue with Cape Town Convention. The very two sides of the arguments are still in play right now and another airline which has gone bankrupt. While I think it can be a separate discussion all together, I 100% agree with you and it is in public space then one of the reasons they are saying is engine problems. Yes, there are engine problems, nobody can deny that. My opinion is that is one of the key reasons, not the only reason why they have gone bankrupt. But having said that, at the end of the day there are two issues, bankruptcy court and Cape Town Convention which was in the Jet Airways situation and now also. So I am just wondering, you have thrown some more light on it Dr. Vandana Aggarwal: I'll just add one sentence. Of course, the movable property, the Aircraft Act, which is going to have an enabling provision for Cape Town Convention obligations for the Indian authorities and also resolving the issue between the IBC and any other act and India's obligations under the Cape Town Convention. I myself have worked on the draft quite a bit, the original drafts while I was still in the chair. And so that is going to come. It's a matter of time. I think we are waiting for the signal to place the matter suitably. Now regardless of that, when we handle the Jet matter, how did we do it? We did it legally correct way because there was an earlier High Court order which allowed when the earlier bankruptcies of Kingfisher etc., had happened and Spice Jet that we were able to use the judicial rulings in order to enact certain rules which the DGCA has been following and it has been following them to a T. And those rules were well before the contracting parties when they were entering into negotiations with a Go First or with anybody else. So everybody prices in the risk. Everybody has already priced in the cost on account of a delay or a legal listing. So you know I am not crying for over the false tears of the lenders, etc. They have already priced in that risk, looking at the legal regime. And we will sort it out. India's commitment to sort it out at the earliest. I will not, you know, I will, I can't emphasize it enough. I said that India has never reneged on any field. Why would it delay in a sector? It is itself trying to promote and set up. Alok: True, true. Dr. Vandana Aggarwal: It's mindless. So that's why what is needed is as I said wisdom on the part of these players who will only benefit from India's sector and aviation growth story and the neighborhood. Alok: So I agree. As far as the lessors are concerned, what I can tell you is they definitely are invested and confident of the India story. That is why they're continuing to be invested. Having said that, also that if and when a concern is raised, and I think as you're saying, the Indian court of law , etc., will solve the matter eventually. And hopefully the right decisions will be made which will make all parties, it will never be where everybody will be happy, but hopefully it will be the right decision. See ultimately the Dr. Vandana Aggarwal: And the size of the problem is very small. You know, it’s just a few aircraft. So you know you don't make the tail wag the dog which is what is being attempted to be done at the moment. That is not correct. India is too big for them to look at 23 aircraft or 24 aircraft and go into a tizzy. In the Covid period airlines were falling like nine pins and all the lessors were not able to move their aircraft out for Covid reasons. Not in India but in the rest of the world. India still went courageously to Wuhan to take its people out. So you know there are so many good stories which need to be looked at from the India Aviation front. We went to every country in the world where there are Indians to bring out safely, for their safety, the Indians who were there, back to India. So you know we do things right, even from Yemen where there was, we took out 200 people who were non-Indian in origin because they asked us for our help. So you know, let us look at the big picture. Alok: Yeah, I don't know, you're right, I... That part is given. Dr. Vandana Aggarwal: India has built world-class airport infrastructure. Delhi airport is in the top 10 now, pax wise. And look at the fabulous infrastructure. I go abroad so many times and it's difficult to see such beautiful facilities which allow you. I was at Mumbai airport just last weekend. It was a wheeze through. It took me four minutes to reach my boarding gate. Alok: Yes. Dr. Vandana Aggarwal: And I didn't sprint. Alok: No, ma'am. I also take hardly any few minutes because now India has the latest face recognition Dr. Vandana Aggarwal: Yeah! Alok: Digi, Digi Yatra technology, and for domestic flights, especially it's a breeze. It helps a lot. I 100% agree Dr. Vandana Aggarwal: So, the ecosystem is also building up which will help leasing because Safran has committed to set up an engine shop, Alok: In Hyderabad. Dr. Vandana Aggarwal: Boeing has committed to set up a conversion pax to freighter conversion outfit in India. So, I mean you know the rest of the things are also falling in place which will promote the ecosystem of leasing out of India. This is also a point I want to emphasize. Alok: See, one thing is given, I also believe that no country or no economy will have always a perfect straight line. There will be troughs, highs and lows all the time. And the matter is how to navigate them. When there are lows, how to navigate them. And I think that the bottom line is that ultimately the lessors or any other overseas investor who comes here, they look at rule of law. If the rule of law is there and there is consistency in enacting those rules of law and consistency interpreting them. That is what they look for mainly. And ultimately every country will have their own way of doing things, their own rules. As long as the rights which are rightfully recognized by the international laws are recognized, that should be that good. You know, that is where I think right now the lessors the concern is they're not getting a lease rental. Airplanes are there for a few months. Total fleet size is I think 60 plus for those guys right now, which is for Go First I mean. Half of the fleet is grounded, more than half is grounded. Your right injured issues are to be solved for the airplanes to fly. But ultimately the lessors are the ones who are holding the bag as of now the way they look at it. So let me now move on to Dr. Vandana Aggarwal: Not for long, not for long. They won't be holding the bag. Alok: I hope so Dr. Vandana Aggarwal: They kept the bag for long. Alok: I really hope so. I think I agree with you should not be too long. Dr. Vandana Aggarwal: Yeah. Alok: Moving on from we have spoken a lot about Gift City and your work in that space. Obviously, a very impressive career journey and the whole piece about building the aviation ecosystem and what are the next things. You have also given your perspective rightly on what you think is going right and what more can be done better. I think that is where it is very, very helpful. What I would like to know is, in your overall career journey, how you have in your career grown up the ladder and where you have reached finally, what are the key learnings, if I may ask you? Purely from a career learning perspective. Dr. Vandana Aggarwal: Okay, so I, Alok: Because so much you have achieved, it will be good to know that. Dr. Vandana Aggarwal: It's very simple. Your objective function has to be right. What is it that you are aiming to achieve when you set out on a particular project or undertake a particular task? If that objective function is right, everything else falls in place with just sincerity and hard work. Nothing else is needed. If the objective function is right, here it was India needs for strategic and other considerations a hub from where aircraft can be leased into India leased and financed into India and the rest of the world because of India's position in the aviation market which is the third and so on and so forth. We can't afford not to have it. So once we got that objective function right, whenever we went out for change, seeking change in existing laws and ways in which matters were entrenched, nobody could say no. How can anybody deny that objective function? So this is something I have realized throughout my career. Make your life simple. Take up projects in the best interest, national interest, global interest, no self-interest. And just work, burn the midnight oil and get it done. And there will be enough people who will walk into your room to tell you where certain tweaking needs to be done, where things can be improved and that works because you are getting the best practical advice as well. Third is consultation. Like I said, consult everybody. We consulted all the ministries, took them on board, got their signature. Yeah, we are with you on all the recommendations. So the officers who are going to get the recommendations are already on board. The ministers who are going to look at those recommendations are already on board. So it is fast-paced. You are not doing it, Ok, I brought out all my recommendations, now let me go and consult. No, no, no. You've already consulted them. Simultaneity rather than sequential approach. Alok: So prior consultation and working in parallel, right? I just wanted to know from you any message you want to give to the audience. The final message from your side. That would be great to know. Dr. Vandana Aggarwal: Well, I can just say that the Indian aviation sector deserves a chance from global players who are still sitting on the fence. I think in my talks with most of them, and I've spoken to most of the lessors in the last three to four years, and I appreciate the fabulous commitment that they are showing. The good interest in all my consultations with them. The report didn't come out from a vacuum. I consulted them. So they are well aware of the things we were planning to do. They are sitting on the fence for some reason. I urge them to just get off their backsides and to put their money in the Indian aviation sector. That's my last message. You will not lose. You will only make millions. I thank you. Alok: I love the candour, Ma’am, thank you very much. And I really appreciate your time. Thanks for sparing time today. I think you're joining us from Delhi all the way, from your home. So thank you very much once more and wish you a good rest of the week ahead. Thank you very much. Dr. Vandana Aggarwal: Thank you.