Toyota said that it would lift a lockout next week on its Indian assembly plants after a meeting with labour groups and a local government mediator to resolve a pay dispute.
A total of 17 workers have been suspended for alleged misconduct and indiscipline including threats against management and deliberate assembly-line stoppages over the protests at two factories in southern India.
Toyota decided to resume production on March 24 after talks with its workers' union and a senior state labour official late on Thursday.
"The decision (to lift lockout) was taken considering the inclination and in the interest of the majority of law-abiding team members," Toyota Kirloskar Motor Ltd said in an emailed statement late Thursday.
The company has asked the employees to give an undertaking of good conduct before resuming work on Monday, a precondition termed as "harsh" by trade union leader R. Satish.
The union representing the workers demanded Toyota withdraw the suspensions, saying there had been no official warning beforehand as required under law.
The world's largest automaker suspended production on Monday at the factories which employ about 6,400 workers near Bangalore after efforts to hammer out a new pay deal failed.
Toyota said some employees had resorted to deliberate stoppages of the production line, abuse and threats to supervisors and continuous disruptions to business for the past 25 days.
Company and union officials have been trying to agree a new contract for the past 10 months, with the government helping mediate negotiations.
Toyota Kirloskar Motor Ltd Union has demanded a pay hike of at least Rs 4,000 ($65), while the company is offering only Rs 3,050 ($50), citing difficult market conditions which have seen car sales in India fall almost 10 percent for first time in over a decade.
The two factories produce about 310,000 autos annually in a range of models including the flagship Camry sedan, the Corolla and the Prius hybrid, mostly for the domestic market.
The strife at the factories comes after unrest at other Indian car plants. A riot in 2012 at Maruti Suzuki's Manesar plant near New Delhi saw workers chase supervisors with iron rods, killing a personnel manager and injuring close to 100 other managers.
The riot, which workers' representatives at the time said was caused by unhappiness over wages and working conditions, saw India's leading carmaker by sales lock out workers for a month and cost it some $250 million in lost production.