The policy is expected to tweak the so-called ‘5/20’ rule that prevents Indian airlines from flying overseas unless they have operated for at least five years and have a fleet of 20 aircraft.
Details were not immediately available ahead of a planned government briefing.
Easing the 5/20 rule would mark an important further step towards liberalising India's aviation market, the world's fastest growing.
The rule, unique to India, had sought to encourage the growth of the nascent domestic aviation industry, but many officials say that it now inhibits Indian carriers from growing their share of international travel.
Airlines are divided on the rule change with incumbents like Etihad-backed Jet Airways, InterGlobe Aviation's Indigo Airlines and SpiceJet opposing it.
Tata Group's two recent ventures - Vistara, in partnership with Singapore Airlines, and AirAsia India, a venture with Malaysia's AirAsia Bhd - are in favour.
Shares in Jet Airways, InterGlobe and SpiceJet rose on news that the policy had been approved in a move that, analysts said, would boost the overall aviation market.
