NEW DELHI (AP) -- India's foreign investment regulator conditionally approved on Monday a $379 million deal by Abu Dhabi-based Etihad Airways to buy a 24 percent stake in Jet Airways, the first foreign investment in an Indian airline since restrictions were eased on aviation deals last year.
The Foreign Investment Promotion Board ruled that Jet Airways must obtain government approval for any changes in the shareholders' agreement with Etihad. It said any arbitration between the two carriers must be conducted under Indian law, the Press Trust of India news agency said.
The deal still needs to be approved by India's capital markets regulator and the Cabinet.
Etihad has reduced the number of directors it will have on the airline's board to two from three proposed earlier, leaving effective control in the hands of Jet Airways.
Mumbai-based Jet, founded in 1993, is one of India's largest domestic airlines and its second-largest international carrier behind state-owned Air India.
It has been aggressively expanding its routes and fleet and now flies to 42 domestic and 21 international destinations but has struggled for years to make a profit.
Jet will likely use Etihad's cash infusion to expand its fleet of 100 aircraft.
India has 1.2 billion people but airline passengers, both domestic and international, number only 160 million a year. The Sydney-based Center for Aviation predicts that number will nearly triple to 450 million by 2020.
It said in a recent report that Jet plans to increase its number of operational wide-body jets from 18 to about 30 over the next 12 to 18 months.
Last year, the Indian government decided to allow up to 49 percent foreign ownership of airlines as part of reforms to help revive a slowing economy.
Fast-growing Etihad was set up in the United Arab Emirates in 2003 and recently has been building partnerships and other alliances around the world as part of its fierce competition with Gulf rivals Qatar Airways and Dubai-based Emirates.