India and the United States are on the brink of finalizing a multi-billion dollar agreement to manufacture fighter jet engines in the country.

The long-anticipated deal is expected to be finalised during the visit of US Secretary of Defense Lloyd Austin to Delhi next week.

Sources close to the matter have revealed that the highly significant deal is likely to be unveiled during Prime Minister Narendra Modi's state visit to the United States next month.

Under this deal, General Electric's GE-414 engines, which have been selected by India to power the indigenous Light Combat Aircraft (LCA) TEJAS MK-2 and the fifth-generation Advanced Medium Combat Aircraft (AMCA), will be manufactured in India in association with a local partner.

The discussions for this agreement commenced over a year ago and have gained momentum following the talks held in Washington as part of the US-India Initiative on Critical and Emerging Technologies (iCET).

In January of this year, the White House confirmed that it had received an application from GE to collaborate in manufacturing engines in India.

The iCET talks, led by National Security Advisor Ajit Doval and his American counterpart, Jake Sullivan, marked an important milestone in the partnership between the two nations.

The agreement holds great significance for India's defense production as the government aims to reduce dependence on foreign imports and promote indigenous manufacturing in defence.

The manufacturing of GE's F414 jet engines in the country would lead to the creation of the infrastructure and the development of a supply chain needed for such complex projects in the future.

Moreover, this collaboration also underscores the United States' willingness to facilitate the transfer of advanced jet engine technology to India. During a visit to India in March, Frank Kendall, Secretary of the US Air Force, expressed the US's openness to full technology transfer.