More than 660 of the 800 pilots from the Indian Commercial Pilots Association who walked out to demand higher pay will return to work at the state run airline, union president A.S. Bhinder said on Friday.
The roots of the dispute lay in the 2007 merger of the country's domestic carrier, Indian Airlines, with the international airline Air India.
The members of the Indian Commercial Pilots' Association, which represents former Indian Airlines pilots, walked out last week saying they were not paid as much as their peers flying international routes.
All striking pilots who were dismissed or suspended are being reinstated, Bhinder said.
"The government has given us assurances that they will look into all our demands," Bhinder said after talks between the union and the civil aviation ministry in New Delhi ended.
The pilots had also demanded an investigation into the financial woes of the company that they said were caused by corrupt and incompetent officials. Last year, the airline's losses totalled more than $1.5 billion.
The pilots' union alleged that the civil aviation ministry deliberately took away profitable routes from Air India and handed them to private airlines.
The strike the latest industrial dispute to hit the airline in recent years has further damaged the image of the so-called "Maharajah" of the skies, which once enjoyed a dominant position in Indian airspace.
Even before the walkout, the national carrier was already in fourth position by market share with 15 percent of passenger traffic.
The stoppage cost the airline two billion rupees ($44 million) in lost revenues, according to Indian media reports, and prompted calls for the state run carrier to be privatised.
Civil Aviation Minister Vayalar Ravi expressed satisfaction over the pilots ending their strike.
"There is no ill-feeling and there will be no feeling of vengeance," he said.