The investment proposal of AirAsia Investment Ltd, Malaysia, has been listed in the agenda of the Foreign Investment Promotion Board (FIPB) meeting scheduled on March 6, sources said.
AirAsia has applied to FIPB to take 49 per cent in a venture with Tata Sons Ltd and Arun Bhatia's Telestra Tradeplace Pvt Ltd, the Malaysian company had said earlier this week.
If cleared by FIPB, this will be the first entry of an foreign carrier in the domestic airlines after the government liberalised the aviation FDI policy in September.
The new policy allows foreign carriers to invest in Indian airlines.
The new airline is looking to start flying from this year-end with 3-4 planes and an initial investment of about USD 50 million by the Malaysian budget carrier.
The proposed joint venture will operate from Chennai and will focus on providing domestic connectivity to Tier-II and Tier-III cities, a statement by the Malaysian carrier from its headquarters in Sepang had said earlier this week.
As per current rules, a carrier must complete five years of domestic operations before becoming eligible for starting overseas flights.
Tata Sons, the holding company of the USD 100 billion salt-to-software conglomerate, will hold 30 per cent in the joint venture but will not have any operating role in the airline.
This will mark the return of Tata to aviation. State-owned Air India had grown out of Tata Airlines, which began flights in 1932.
AirAsia, through its operations based in Thailand and Malaysia, flies to Chennai, Bangalore, Kochi, Tiruchirappalli and Kolkata in addition to 20 countries across AirAsia, Tatas and Hindustan Aviation of Bhatias have signed a partnership agreement for the venture.
Air Asia has made the move to invest even as Etihad and Jet Airways continue to work towards finalising a deal for the Gulf carrier to invest in Jet.