DUBLIN, Jan 31 (Reuters) - India's fast-growing airline industry faces higher leasing bills unless the country clarifies its insolvency laws, the head of major leasing firm Aviation Capital Group (ACG) said on Wednesday.

Foreign lessors, including an Irish subsidiary of U.S.-based ACG, were blocked from recovering jets caught up in the bankruptcy of budget carrier Go First last year and many are still embroiled in a legal battle to recover their assets.

India amended its insolvency laws last October to exclude leased aircraft from assets that can be frozen in a bid to address discrepancies between local and global rules, including the 2001 Cape Town Convention.

India has ratified but not fully implemented the treaty, which is designed to encourage lessors that control half the world's fleet to rent jets in exchange for a mechanism allowing them to take back relatively easily when airlines default.

ACG Chief Executive Thomas Baker said lessors were still searching for clarity, despite the Indian government's move.

"It's incredibly frustrating. They always find a way to continue to delay the process. The government clarified it in the fall that it should apply to existing aircraft but unfortunately, no, no clarity," Baker told Reuters in an interview.

"I think it fundamentally impairs the Indian aviation market and they need to fix it. I think it fundamentally changes the way we price risk in that market. They're hurting themselves."

Baker was speaking on the sidelines of the Airline Economics conference, where he said delegates were overly optimistic in thinking the global supply of new aircraft would catch up with demand by 2029, given the backlog amassed during years of production delays.

He suggested that the supply constraints would present acquisition opportunities for larger lessors like ACG, a subsidiary of Tokyo Century Corp, which is among the world's top 10 lessors by fleet size.

Smaller players without aircraft on order or access to flexible capital will find the next few years more challenging, he said.

"The order book for us had always been that very visible, predictable growth. As it becomes less visible, more unpredictable, you will find the lessor community having to look for other ways to grow," Baker said.

"So I do think over the next several years, for a certain set of lessors with key strategic attributes, it's setting up very, very nicely."

(Reporting by Padraic Halpin; Editing by Aurora Ellis)