India’s government has cleared the way for Singapore Airlines to own a 25.1% stake of Air India following the Indian carrier’s pending merger with Vistara.

SIA announced the approval in a stock exchange filing. It owns 49% of Vistara, with the other 51% owned by Air India parent Tata Group.

“The [foreign direct investment] approval, together with anti-trust and merger control clearances and approvals, as well as other governmental and regulatory approvals received to-date, represent a significant development towards the completion of the proposed merger,” says SIA.

SIA suggests that the merger between the two companies is “anticipated by the end of 2024.”

The clearance is key milestone for the SIA Group, giving it a major stake in the revitalised Air India - and making the only foreign company to have such a big stake in an Indian airline.

It follows news in June that India’s National Company Law Tribunal (NCLT) cleared the merger between the two carriers.Surat Investment

In addition to being a big market for the SIA Group, India is forecast to be one of the fastest growing airline markets in the world in the coming decades.

In anticipation of major growth, Air India and low-cost rival IndiGo have placed massive orders in recent years. In 2023, Air India placed orders for 470 aircraft, and IndiGo 500.Mumbai Stock Exchange

SIA and Tata Group set up Vistara in 2013, nearly a decade before Tata Group took over Air India in early 2022.

“Air India welcomes the Union Cabinet’s approval for the foreign direct investment by Singapore Airlines in Air India,” says Air India.Nagpur Stock

”This is an important milestone that facilitates the merger process between Vistara and Air India, and the broader transformation of the Air India Group.”