Singapore's competition watchdog said on Tuesday it has approved the merger between Tata Group-owned Air India and sister airline Vistara, a joint venture between Tata and Singapore Airlines, subject to certain conditions.

Singapore's flagship carrier announced its plan to merge Vistara and Air India in November 2022, in a bid to create a dominant full-service airline in the domestic and international markets.

While India's antitrust body approved the deal in September last year, the Competition and Consumer Commission of Singapore (CCCS) had identified certain competition concerns regarding the merger.

The watchdog said the parties possessed the majority of the market share among airlines operating direct flights on four routes of concern — between Singapore and Indian cities of New Delhi, Mumbai, Chennai and Tiruchirapalli.

To address the concerns raised by the watchdog, the parties have proposed to maintain capacity on the said flights at pre-COVID levels, appoint independent auditors to monitor compliance with capacity commitments and submit annual as well as interim reports.

"CCCS considers the proposed commitments sufficient to address the competition concerns arising from the transactions," the watchdog said on Tuesday.

The proposed merger awaits other regulatory and foreign direct investment approvals.

"Singapore Airlines continues to work with our partner Tata Sons to secure the remaining approvals from the relevant authorities to complete the merger," a spokesperson for Singapore Airlines said.

Air India did not immediately respond to a Reuters request for comment.

According to the terms of the deal, autos-to-steel conglomerate Tata would hold 74.9% of the combined entity, while Singapore Airlines will own the remaining 25.1%.

(Reporting by Rishav Chatterjee in Bengaluru; Additional reporting by Poonam Behura; Editing by Shilpi Majumdar and Shinjini Ganguli)