NEW DELHI, Jan. 10 (Xinhua) -- India's Cabinet Wednesday approved 100-percent foreign direct investment (FDI) in single-brand retail via automatic route to boost economic growth, sources said.

The move is a departure from an earlier rule under which FDI up to 100 percent was allowed in single brand retail only under the government approval route.

The Indian Cabinet, headed by Prime Minister Narendra Modi, also cleared a proposal allowing foreign airlines to invest up to 49 percent in national carrier Air India, sources said.

"The move is to facilitate divestment of ailing carrier Air India," sources said.

The relaxation of FDI policy is actually aimed at creating a more investor-friendly climate for foreign companies and in turn boost domestic economic growth and create jobs, experts say.

Foreign investments are considered crucial for India, which needs around 1 trillion U.S. dollars for overhauling its ports, airports and highways to boost growth.

FDI during April-September this fiscal year grew by 17 percent to 25.35 billion U.S. dollars. FDI into India increased by 9 percent to 43.48 billion U.S. dollars in the last fiscal year.