Nokia said late Wednesday that it had reached a wage agreement with employees at its mobile phone manufacturing factory in India.
Work at the factory will resume immediately, Nokia said in a statement.
A strike that began Tuesday has threatened production from the factory, which is located in Chennai in south India.
Besides an agreement on wages with the Nokia India Employees Progressive Union (NIEPU), Nokia has also offered to revoke the suspension since January of some 60 employees, who were charged by the company with misconduct.
The suspension had led to some 1,200 of the 8,000 workers going on strike in January.
The NIEPU was not immediately available for comment on the new agreement, which Nokia said would be signed on Thursday by the union, the company, and the local state government of Tamil Nadu of which Chennai is the capital.
The workers went on strike after a dissident group in the NIEPU opposed an agreement that was being negotiated on Monday by Nokia with the union, according to sources who declined to be named. Nokia said the negotiations were close to being finalized.
The long term wages being offered to its employees are among the highest in the region in similar industries, Nokia said in a statement on Tuesday.
Unlike the IT services and business process outsourcing industry in the country, the manufacturing sector has strong and at times fractious trade unions.