Tata also owns a majority stake in Vistara, a premium joint venture with Singapore Airlines Ltd, as well as budget airline AirAsia India.
"I see them as formidable competition but I welcome them. It is a sensible thing," IndiGo CEO Ronojoy Dutta told a CAPA Centre for Aviation event on Wednesday, in a pre-recorded interview.
The government announced on Friday that Tata would resume control of Air India, marking the end of years of struggle to privatise the financially troubled airline.
"I think they will become more economically responsible," Dutta said of Air India. "Having a large player funded by taxpayers is not fair competition for us."
IndiGo controls more than half of the Indian domestic market but its international operations are far smaller than Air India's.
Dutta said IndiGo was focused on flights within seven hours of India using narrowbody planes, while Air India was more focused on full-service long-haul operations, leaving plenty of room in the market for both.
In the domestic market, low-cost carrier Akasa Air, backed by billionaire Rakesh Jhunjhunwala, expects to take to the skies next year.
One of Akasa's co-founders, Aditya Ghosh, spent a decade with IndiGo and was credited with its early success.
Dutta said he viewed Akasa as less of a competitive threat than Tata's airlines over the next two to three years because it would take time for the new entrant to build up operations.
(Reporting by Jamie Freed in Sydney; Editing by Mark Potter)