Following the release of a new draft aviation policy, India has eased strict rules for foreign investment in commercial aviation.
It is a move being seen as a positive step to boost air travel and develop new airports.
"The opening of foreign direct investment will help bring in much-needed cash, aircraft fleet and best practices," said Amber Dubey, India head of aerospace and defence at KPMG.
"We may see its positive impact over the next 6-12 months," Dubey said.
The markets also agreed with airline stock prices gaining by more than 5%.
The new rules allow 100% foreign ownership of India-registered airlines, up from the current 49% , but only once the government has given approval.
India will also allow up to 74% foreign ownership in brown field airports.
The easing of rules follows a new aviation policy which gives domestic carriers more freedom to operate international routes.
Previously Indian airlines had to wait five years to fly overseas once they deployed a fleet of at least 20 aircraft in domestic markets.
