Government could ease restrictions that prevent domestic airlines from flying on international services within a month, potentially benefitting start-ups set up by Singapore Airlines and Malaysia's AirAsia that aim to begin operations in 2014.
Existing rules require Indian carriers to be in operation for at least five years and have 20 aircraft to be eligible to fly international routes.
Civil Aviation minister Ajit Singh told reporters that New Delhi would seek the federal cabinet's approval by next month to 'scrap this rule'.
Indian conglomerate Tata Sons has formed a joint venture with SIA to start up a full service carrier, which is expected to begin operations in the second half of 2014.
Tata is also an investor in AirAsia India, which is expected to compete in the Indian low-cost market from the second half of the year.
Low-cost carrier GoAir, which began operations in 2005 but has fewer than 20
aircraft, could also be a beneficiary.
In addition, the ministry is also looking into a proposal to allow Airbus's A380 planes to land in local airports, Singh said on Tuesday.
"We have asked for comments from ground handling and immigration, security basically. Because this is the infrastructure which will be affected because one plane will have up to 500-600 passengers at a time. So we are awaiting their comments," said Singh.
A change could benefit carriers like Singapore Airlines, Emirates, Lufthansa and British Airways that operate the super-jumbo and fly to India, as well A380 customers like Etihad and Qatar Airways who have not taken delivery of the aircraft.
Kingfisher Airlines was the only Indian A380 customer, but Airbus said on Monday that it had revoked that order. The Indian carrier, which had ordered five A380s, stopped operations in October 2012 after several years of losses.