"It (Tata-SIA proposal) has been cleared," Economic Affairs Secretary Arvind Mayaram told reporters after a meeting of the Foreign Investment Promotion Board (FIPB) here.
Mayaram said no riders have been set for the joint venture.
In their new venture, Tata SIA Airlines Ltd, Tata Sons would hold 51 per cent stake and Singapore Airlines (SIA) 49 per cent.
The venture secured the approval of the Corporate Affairs Ministry last week.
With the clearance of the FIPB, decks are cleared for Tata SIA to launch operations as a full-service air carrier in India.
The FIPB, headed by Economic Affairs Secretary Arvind Mayaram, is an inter-ministerial panel for approving Foreign Direct Investment (FDI) across sectors.
The two partners are making an initial investment of $100 million to launch the airline, which may take off next year after getting all the required clearances.
Tatas and Singapore Airlines have assured the government that control of their proposed venture would always remain in Indian hands, while seeking approval to offer full-service passenger airways on both domestic and international routes.