India's minister of civil aviation announced the agreement on Wednesday.
Air India refused delivery of Boeing's fuel-efficient 787 last week until the compensation issue was resolved.
Boeing was more than three years late in delivering the 787 due to the company's over-reliance on global partners. The company delivered the first Dreamliner in September to Japan's All Nippon Airways. Since then, it has delivered a total of 11 787s.
The complications with the 787 mean initial deliveries have been costly to Boeing. An analyst estimated Monday that 787 deliveries in the first quarter cost Boeing $240 million per airplane, significantly more than the 787 sells for.
Although Air India has accepted Boeing's compensation offer, the carrier also needs approval from India's Cabinet Committee on Economic Affairs, reports The Economic Times.
Air India, which has ordered 27 787s, should receive three Dreamliners this month once its agreement with Boeing is given the OK by India's government.
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