AirAsia's proposal to set up a low-fare airline in joint venture with Tata Sons and Arun Bhatia of Telestra Tradeplace Ltd was approved after a very careful scrutiny of the foreign direct policy, Commerce & Industry Minister Anand Sharma said.

On Wednesday, the Foreign Investment Promotion Board (FIPB) approved the Malaysia-based budget airline AirAsia's proposal to launch a new airline in India by teaming up with the aforementioned partners.

But, soon after the announcement of the approval, the Civil Aviation Ministry officials sought further clarification on the FDI policy in the sector, particularly on whether a foreign carrier could make investment in a new airline.

Some officials from the finance ministry also said that a strategically placed comma in the Department of Industrial Policy & Promotion's (DIPP's) press note on FDI in civil aviation sector meant that a foreign airline could own up to 49 per cent stake in existing Indian airlines, as well as new carriers.

Mr. Sharma stressed that he was confident that the approval was given after a careful scrutiny of the policy.

Speaking on the topic, Mr. Sharma said, "I am sure this decision has been made after very careful scrutiny of the policy and its understanding by the FIPB."

Civil Aviation Minister Ajit Singh said that his ministry had no problem with a foreign carrier first forming a JV and then seeking a licence, but he added that the content of the policy needed more clarity. He also stressed that the DIPP should clarify everything to avoid any legal hassle in the future.