Citi and Credendo have successfully closed a $328 million financing for eight Airbus aircraft for IndiGo, marking a historic milestone in Indian aviation finance. The transaction was executed through IndiGo's subsidiary, InterGlobe Aviation Financial Services IFSC Private Limited, and represents the world's first aviation financing transaction insured by the Belgian export credit agency (ECA) Credendo and the first export credit agency (ECA)-backed aircraft financing through GIFT City's International Financial Services Centre (IFSC) leasing structure. As per Citigroup, this financing solution was jointly conceptualised, structured and developed by Citi, which acted as sole mandated arranger, ECA Coordinator and sole lender, and Credendo in close partnership with IndiGo and Airbus. The financing covers six Airbus A321 aircraft and two A320 aircraft, with Citi acting as the sole mandated arranger, export credit agency (ECA) coordinator and sole lender for the transaction.
The government has increased the windfall tax on jet fuel prices to ₹12.5 per litre, effective from fortnight 16, 2026, up from the previous rate of ₹9.5 per litre. According to Bajaj Finserv website explainer, this windfall tax is imposed during unprecedented times such as geopolitical crises, pandemics, wars, or supply shortages to seize extraordinary gains from companies. The tax is applied in addition to standard tax rates and is expected to benefit the government's revenue book. As per Bajaj Finserv, windfall taxes are disadvantageous to companies as they reduce profits and could curb innovation by forcing companies to limit research and development investments.
According to IndiGo's latest announcement, the airline has introduced a fuel surcharge ranging from ₹425 to ₹2,300 per sector across different route categories, effective from 12:01 AM on March 14. The surcharge comes as airlines face escalating aviation turbine fuel (ATF) prices due to geopolitical tensions in the Middle East, with IATA's Jet Fuel Monitor indicating an 85% increase in fuel prices for the region. As per IndiGo's statement, aviation turbine fuel represents nearly 40% of an airline's operating costs, making this sudden and steep increase material to all carriers' costs and networks. The windfall tax hike is expected to further increase ATF costs, potentially leading airlines to pass these additional burdens to customers through higher ticket prices.
K Balasubramanian, India CEO and Banking Head at Citi, stated that by combining Citi's cross-border aviation and ECA financing expertise with Credendo's credit insurance and IndiGo's GIFT IFSC platform, they have delivered a first-of-its-kind solution that opens a vital new pathway connecting Indian aviation with the deep pool of ECA-backed international liquidity and supports the next phase of India's aviation growth. Frank Vanwingh, the group deputy CEO for Credendo, said the ECA aspires to become a long-term partner for Belgian aviation stakeholders seeking access to international opportunities and innovative financing structures. The transaction demonstrates how international financing and export credit support can help meet the funding requirements of India's expanding aviation sector. Riyaz Peermohamed, Chief Aircraft Acquisition and Financing Officer at IndiGo, said the deal "demonstrates the potential of GIFT IFSC to bring together international banks and export credit agencies."
According to The Hindu BusinessLine, Riyaz Peermohamed, Chief Aircraft Acquisition and Financing Officer at IndiGo, said the transaction would provide the airline with a competitive source of liquidity for its growing Airbus fleet. IndiGo operates a fleet of more than 430 aircraft and runs nearly 2,200 daily flights, connecting over 95 domestic and 40 international destinations. The airline carried more than 123 million passengers in FY26 and expects the financing to support its fleet and network expansion by diversifying sources of long-term funding. In 2023, IndiGo announced an order to buy 500 narrow-body aircraft from the A320 family from Airbus and also committed to adding the widebody Airbus A350 to its fleet. According to NDTV Profit, IndiGo shares have shown mixed performance with a 9% decline in three months and 17% drop over the past year, though they have gained 8% in six months and 83% in three years.
The deal reinforces GIFT IFSC's role in developing India as a global aircraft leasing hub while broadening funding options for the country's aviation industry. As of June 2026, 37 aircraft-leasing entities were operating from the IFSC, with a combined portfolio of 412 aviation assets, including 237 aircraft, 87 engines and 85 auxiliary power units (APUs), according to the IFSCA's April-June Bulletin. Financing extended by International Banking Units to aircraft-leasing entities stood at $664.77 million at the end of June 2026, compared with $234.6 million a year ago. The Adani Group has set up aircraft-leasing vehicles in the IFSC, while the Tata Group's Air India and IndiGo have established GIFT City entities to finance and lease aircraft. Akasa Air has also set up an IFSC leasing arm as it expands its fleet, with the Aditya Birla Group reportedly looking into similar arrangements. K Balasubramanian noted that "the government has made aircraft leasing through GIFT City a clear policy priority," highlighting the strategic importance of this financing structure for India's aviation sector.
