Following the decision, Maharashtra revoked suspension after an appeal by McDonald's Indian franchisee.
An executive at McDonald's biggest Indian franchisee Westlife Foodworld said on Tuesday the country's top food standards authority had verified its claims of using real cheese in its products after a crackdown by Maharashtra state.
Maharashtra in November suspended the licence of a McDonald's outlet in the east of Mumbai for allegedly using cheese alternatives made of vegetable oil instead of real cheese, and misleading consumers.
The state revoked the suspension after an appeal by Westlife, which dropped the word "cheese" from some of its products including burgers and nuggets in December.
Following a decision by the Food Safety and Standards Authority of India (FSSAI), Westlife can use the word cheese in product names where it is one of the key ingredients, Managing Director Saurabh Kalra said at a press conference on Tuesday.
The FSSAI and Maharashtra Food and Drug Administration did not immediately respond to requests for comment.
"The verification confirms the brand's assertion that it uses 100% real cheese and that it does not use any cheese analogues or substitutes in any of its products," Westlife said in a statement.
Westlife, which operates McDonald's outlets in western and southern India, added that a nationally accredited independent lab had also confirmed it used real cheese in its products.
Kalra said the FSSAI's decision was binding on all local authorities, including Maharashtra's, adding that Westlife was working with the state agency to close the issue.
Shares in Westlife reversed an early fall of 1% to stand 9.4% higher after the press conference. They sank 6.7% on Feb. 27 when Reuters reported Maharashtra would inspect all its McDonald's outlets in the state.
Kalra described the incident as a "bump" in Westlife's long-term plans.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)