Air Asia Bhd has been give approval by Indian regulators to enter into a joint venture for an Indian airline. This is the first foreign investment proposal approved after rules on airline ownership were relaxed.

The venture includes Indian conglomerate Tata group still has to gain approval from the Foreign Investment Promotion Board. By this approval, the group would need to be licensed by the Directorate General of Civil Aviation. According to Economic Affairs Secretary Arvind Mayaram, Air Asia would own 49% of the venture and would infuse 800 million rupees or US$14.6 million in the new airline's operations.

Other similar deals are in the pipeline, such as Jet Airways India Ltd in discussion with Etihad Airways PJSC are now being awaited. The whole process of approval may take as long as eight months and would include inspection of aircrafts of the airline and on ground services.

Because of the approval, Air Asia shares increased by 1% to 2.96 ringgit per share at close of the exchange in Kuala Lumpur.