The U.S. defense firm said it will partner with Indian firm Tata Advanced Systems to manufacture the wings at a facility in Hyderabad from late 2020.
Quoting an executive from Lockheed Martin, Reuters reported that the firm believed there would be "no impact to the U.S. market" because of the production switch. The unnamed executive added that the deal was not dependent on India buying F-16 aircraft for its air force.
In 2016, the United States declared India a "major defense partner" and this week sees the beginning of "2+2" dialog on strategic affairs between the two countries. Talks are set to begin on Thursday when Secretary of State Mike Pompeo and Defense Secretary James Mattis will sit down for talks with India's External Affairs Minister Sushma Swaraj and Defense Minister Nirmala Sitharaman.
The U.S. state department's spokesperson for South Asia, Helaena White, told CNBC via email Friday that the talks indicated a "deepening strategic partnership between the United States and India, and India's emergence as a global power and net security provider in the region."
White added that bilateral defense trade between the U.S. and India is estimated by the state department to reach $18 billion by 2019. As recently as 2008, the figure was essentially zero.
One sticking point for Thursday's meeting is the possibility that the U.S. could impose economic sanctions on India unless it reduces oil imports from Iran and cancels an order of anti-aircraft missiles from Russia.