The Indian Navy is reportedly planning to buy 12 Utility Seaplane Mark 2 (US-2i) amphibious aircraft from Japan-based ShinMaywa Industries.
The deal is expected to be valued at around $1.65bn, reported The Hindu Business Line.
Both the countries have signed a deal to expedite the export of amphibious search-and-rescue (SAR) aircraft to India.
The two countries have signed an agreement pertained to the transfer of defence equipment and technology co-operation, during the Japanese Prime Minister Shinzo Abe's visit to India in December, according to sources.
The sources were quoted as saying: "The agreement provides a framework to enhance defence and security co-operation by making available to each other, defence equipment and technology necessary to implement joint research, development and production."
ShinMaywa will initially deliver two US-2is to India, and the remaining ten aircraft will be produced in the country, under technology transfer arrangements with an Indian partner.
The company has already started negotiations with some Indian firms, such as Mahindra Defence, Hindustan Aeronautics, Tata Aerospace, L&T and Pipavav Defence to assemble the aircraft in the country.
Around seven US-2s are currently in operation with the Japan Maritime Self Defence Force.
Both countries have also signed another deal over security measures to protect classified military information.