The foreign investment regulator cleared a decision on Vodafone Group Plc's $1.6 billion plan to take full ownership of its local unit, Economic Affairs Secretary Arvind Mayaram said on Monday.

The deal needs final approval from the cabinet.

India allowed foreign companies in the telecommunications sector to raise their holdings to 100 percent from 74 percent in their Indian businesses in August.

Vodafone, which entered India in 2007 by buying Hutchison Whampoa's local cellular assets in an $11 billion deal, directly and indirectly owns a combined 84.5 percent of Vodafone India, the country's No.2 telecoms company by users and revenue. Its direct holding in the unit is 64.4 percent.

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