Nissan Motor Company and authorities in Tamil Nadu are close to settling a dispute over which the Japanese carmaker initiated international arbitration seeking more than $729 million in unpaid dues and damages, sources told. Under the proposed settlement, whic-h could be finalised as early as this week, Nissan would take a lower payout of about Rs 2,000 crore in unpaid dues and forego sums it has sought in damages, sources said.

The resolution would be a victory for prime minister Narendra Modi, who is trying to transform country’s image as business-friendly nation. Nissan sent a legal notice to the Modi government in 2016 seeking payment of incentives it said it was due from the government of Tamil Nadu as part of a 2008 agreement to set up a car manufacturing plant in the southern state.

The carmaker, in its notice, had claimed Rs 2,900 crore in unpaid incentives and Rs 2,100 crore in damages, plus interest and other costs. The Tamil Nadu government has since paid some money and now owes Nissan about Rs 2,000 crore in unpaid incentives, the source said.

According to the proposal the two sides are close to agreement on, the state would pay the automaker Rs 300 crore upfront once the deal was signed, with the remainder paid by the end of 2019 in 10 installments, the sources said.

Nissan would drop the arbitration case against India once the settlement was ag-reed. The proposal has been drawn up by state government officials and company executives and needs to be approved by Tamil Nadu’s chief minister and the carmaker’s executives in Japan before it is finalised, one of the sources said.

The Tamil Nadu industries minister MC Sampath confirmed the state was in advanced talks with Nissan. “A final decision on this matter will be taken soon, there is a conducive environment that prevails between the two parties now,” he said, without commenting on the detail of the proposal. “Nissan continues to work with the government to resolve this matter,” a company spo-kesman said, without commenting on the detail of the proposal. The Prime Minister’s Office did not respond to a request for comment.

Nissan, which has less than a 2 per cent share of India’s passenger vehicle market, builds and sells the Micra hatchback, Sunny sedan and Terrano sport-utility vehicle in the country and sells budget cars under its Datsun brand.

In 2008, when the Japanese carmaker and its alliance partner Renault agree-d to invest in a car plant in Chennai, the state government promised several incentiv-es. Over seven years, companies spent Rs 6,1-00 crore setting up a plant with an annual production capacity of 480,000 vehicles, which entitled them to receive the incentives in 2015, according to the legal notice.

The Nissan case, covered by a bilateral trade and investment agreement between New Delhi and Tokyo, is one of more than 20 international arbitration proceedings brought by investors against India, among the highest against any single nation.