Airbus is to sell 43 passenger planes worth $2.5bn (£1.4bn) to India's state-owned airline Indian.
The deal with Airbus, which is 80% owned by the European defence group EADS and 20% by the UK's BAE Systems, comes after three years of talks.
The agreement marks the first purchase of new planes by Indian for 15 years. The carrier, formerly known as Indian Airlines, flies mainly domestic routes.
From a former monopoly position, its domestic market share has slid to 33%.
Indian has fallen behind privately-run Jet Airways, which has 43% market share and regularly wins awards for good service and food.
The deal between Indian and Airbus will be formally signed by French President Jacques Chirac and India's Prime Minister Manmohan Singh, who were meeting in Delhi on Monday.
Indian will purchase Airbus A320 and A319 planes.
Noel Forgeard, chief executive of EADS which owns 80% or Airbus, described the agreement as "a great achievement" which had come to a "happy conclusion today".
A hold-up in talks last September was only cleared after Airbus lowered its price by around $75m, the Indian government said last September.

I guess it's because of sucky runways?  ???