Maruti Suzuki says it has resolved its labour problems at the Manesar plant in Northern India and that operations at the facility will restart over the weekend.
The carmaker has lost an estimated US$400m in production shortfall this fiscal year and seen its market share cut due to labour problems.
Maruti said in a statement: "The management and workers have signed the agreement in a spirit of cooperation and mutual respect, and look forward to work closely together for the benefit of all stakeholders of the company."
The dispute started two weeks ago and on Wednesday Maruti revived talks with the striking workers at Manesar after they walked out of a meeting with the company's management and local government representatives on Tuesday.
The strike by about 1,500 workers at Manesar severely hit vehicle production and has also extended the waiting period to several months for the Swift hatchback, for which the company has more than 100,000 pending orders.
Production at Maruti's Gurgaon plant near Delhi has also been disrupted due to a shortage of parts.