The US State Department has approved the potential sale of 31 armed drones, missiles and other equipment to India for nearly $4bn (£3.14bn).
The MQ-9B Predator drones deal had been announced during PM Narendra Modi's visit to US in June 2023.
In December, it was put on hold by a Senate committee pending investigation into an alleged Indian assassination plot on US soil.
The deal will now be confirmed after approval from the US Congress.
It includes the sale of 31 armed MQ-9B SkyGuardian drones, 170 AGM-114R Hellfire missiles and 310 laser small diameter bombs, communications and surveillance equipment and a precision glide bomb, the Pentagon said. General Atomics Aeronautical Systems will be the principal contractor for the deal.
According to Reuters news agency, Senator Ben Cardin said he had ended his "hold" on the agreement for the deal after the US government agreed to fully investigate the assassination plot.
"The [Biden] administration has demanded that there be investigation and accountability in regards to the plot here in the United States, and that there is accountability within India against these types of activities," Mr Cardin told reporters.
Last year, the US accused Delhi of plotting to assassinate an American citizen who advocates for Khalistan - an independent Sikh state carved out of India.
A government spokesperson said the US had "conveyed our expectations that anyone deemed responsible should be held accountable".
India's foreign ministry denied anything to do with the murder plot. It also said a high-level inquiry committee had been formed "to investigate the allegation and address the US government's security concerns".
On Thursday, the Pentagon said the proposed drone deal with India "will support the foreign policy and national security objectives of the United States by helping to strengthen the US-Indian strategic relationship".
