India’s foreign investment regulator has cleared AirAsia Berhad’s proposal to set up a new Indian low-cost carrier (LCC) jointly with the Tata Group. The new carrier still needs to receive an operating license from the Directorate General of Civil Aviation. When launched, the new LCC will be India’s eighth domestic carrier.

There were some doubts earlier this week about whether the permission for FDI in Indian aviation would apply to new airlines. Much of the action after the government permission was focused around investments in cash-starved Indian carriers. Abu Dhabi-based Etihad Airways is close to picking up 24% in Jet Airways. However, all doubts were cleared when the Foreign Investment Promotion Board cleared the AirAsia proposal.

AirAsia CEO Tony Fernandes tweeted, “The good always win. People and companies with good intentions to create jobs and make life of the average man better will always win.”

AirAsia will have a 49% stake in the new airline, likely to be called AirAsia India, while Tata Sons Ltd will hold 30% and Telestra Tradeplace will hold the remaining 21%. The plan is to start with an investment of around $14 million.

Addressing a news conference last week, Fernandes said the airline will start with three to four Airbus A320s based in the southern Indian city of Chennai, and would look to scale up rapidly. The idea is to build a new customer base from millions of people who still do not travel by air. Fernandes said that despite being 50 times the size of Malaysia, all Indian carriers put together still have fewer aircraft than those in Malaysia.