The deal involved the purchase of twelve helicopters to transport top politicians across the country.
The Indian Government on Wednesday cancelled the Rs.3600 crore AgustaWestland VVIP chopper deal, television channel reports and other media quoted unnamed defence ministry sources, as saying.
The deal involved the purchase of twelve helicopters to transport top politicians across the country.
The deal for the purchase of AW101 helicopters hit a block in February 2013 after the then-chief executive of the Italian firm Finmeccanica was arrested by his country’s police for allegedly paying bribes to secure the deal, prompting the Indian Government to freeze payments.
India took delivery of three helicopters before the deal stalled. Three more have been ready for delivery to India since April 2013, three were close to completion, and work had begun on the final three at the AgustaWestland plant in Britain.
Though AgustaWestland and Finmeccanica both denied any wrongdoing, the Indian defence ministry has over the past year maintained that there was very little chance of the contract being finalised, especially with Defence Minister A.K.Antony completely opposed to it because both companies had been charged with violating the integrity pact.
Under India's defence procurement rules, the integrity pact prohibits paying or accepting bribes. The government can cancel a contract if the pact is violated, and the seller has to forfeit any security money it deposited as a bidder.
In October 2013, AgustaWestland had called for arbitration in the dispute, but the Indian defence ministry said there is no case for such action as the firm had breached the integrity pact.
The Comptroller and Auditor General of India (CAG) said in August last year that the defence ministry had initially stipulated that the helicopters should be able to fly to an altitude of 6,000 metres (19,685 feet), which meant that AgustaWestland could not compete since the AW101 was certified to fly only to 4,572 metres (15,000 feet).
Later, the minimum altitude requirement was lowered to 4,500 metres (14,763 feet), even though the helicopters were expected to be used in mountainous northern and northeastern parts of the country where altitudes are higher, it said.
India is the world's largest arms importer and plans to spend USD 100 billion on defence equipment over the next decade.
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