kickstarting attempts to attract well-heeled passengers in a market dominated by loss-making, no-frills carriers.
New Airline Vistara a Sanskrit word meaning "Limitless Expansion took off from New Delhi for financial hub Mumbai, offering Flyers premium services including a string of special meal options.
"Being full service doesn't mean you're lavish or you're over the top. It means serving different customers' needs differently," Vistara Chairman Prasad Menon said.
India's Aviation market is expected to be the third-largest globally within a decade. But the sector is currently plagued by losses stemming from hefty operating costs and bruising fare wars that has left at least one no-frills carrier, SpiceJet, struggling.
Vistara is steering clear of the budget market dominated by a string of mostly loss-making Airlines which last year offered fares lower than the price of a second-class train ticket.
Instead, Vistara's premium economy fares for short Flights from the capital to Mumbai start at 12,000 rupees ($A236.50).
The Airline is 49-per cent owned by deep-pocketed Singapore Airlines, one of the world's top-rated carriers. Mumbai-based Tata conglomerate, one of India's most respected brands, controls the other 51 per cent.
"India's Aviation market has been expanding rapidly and we have been eager to directly participate in and contribute towards this growth story for many years," Singapore Airlines CEO Goh Choon Phong said in a statement.
Analysts said Vistara has a chance of success given the recent drop in hefty fuel prices, thanks to a fall in global oil prices, and the fact the ailing Indian economy was expected to pick up.
"There will always be a niche of passengers who do not mind paying a bit more for better quality," Amrit Pandurangi, senior director for Aviation at Deloitte India, told AFP.
"It (Vistara) just needs to keep focusing on maintaining its difference from other players in the market."
India's intense Airline competition has seen at least one casualty, with Kingfisher Airlines grounded in 2012 laden with debts, and Spicejet currently desperately seeking an outside investor.
Vistara, operating the 148-seater Airbus A320-200 on three routes initially, is the third full-service carrier after state-run Air India and Jet Airways, both currently in the red.
Tata also holds a stake in an Indian low-cost carrier, which started Flying last June, operated by Asia's biggest-budget Airline AirAsia.
The previous national Congress government began allowing foreign Airlines to buy up to 49 per cent stakes in Indian carriers in 2012.
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