General Electric's aerospace unit made a deal with HALs to make engines for the fighter planes of the Indian Air Force together in India.
The announcement was planned to happen at the same time as Modi's trip to the US. It is the most important of several agreements that are expected to be made between India and the US during Modi's visit.
The US Navy has used the GE F414 engine for more than 30 years, and planes in several other countries also use it.
GE has shipped more than 1,600 F414 engines that have been in the air for more than 5 million hours. The engines are also made in South Korea.
India has been trying since the 1980s to make an engine for the "Tejas" light attack aircraft, but they have had a hard time. HAL Tejas is powered by GE's F404 engine, and the more powerful Tejas Mark 2 will have eight F414 engines.
Over the last 20 years, India and the US have become closer, and they are now building a strong relationship based on trade, defense, technology ties, and a political alignment.
Washington called India a "major defense partner" in 2016, and by 2020, India had spent more than $20 billion on weapons from the US. China and Pakistan are both armed threats to India, and it is the country that buys the most weapons in the world.
As a counter to China's growing influence around the world, Washington wants to strengthen ties with India and is ready to let India use important American technologies like F414.
Over the next three years, the US will send the first F414 engines, and HAL will set up a factory in India to make them. Early in the next decade, both the F414 in India and the Tejas Mark 2 will be made on a large scale.