NEW DELHI (AFP) — The Indian government scrapped on Thursday a 600-million-dollar deal to buy 197 military helicopters after allegations of corruption in the bidding process.
"The government has decided to cancel the RFP (request for proposal) for 197 helicopters for the army. A fresh RFP will be issued soon," defence ministry spokesman Sitanshu Kar told AFP.
A fresh global tender will be issued early in the new financial year, which begins in April, an official of the policy-making Defence Acquisition Committee (DAC) said, speaking on condition of anonymity.
The deal was awarded to Eurocopter, the helicopter unit of the European Aeronautic Defence and Space Company (EADS), which makes civil and military aircraft, in February 2007.
Eurocopter is the global leader in sales of civil and military helicopters, with over 50 percent of the world market.
The contract was part of an army modernisation programme to replace the Indian military's vintage fleet of French-built Alouette helicopters.
"The deal stands spiked as EADS deviated from pre-approved parameters of the RFP," the DAC official said.
"Once the discrepancies came to the notice of the defence ministry which referred the matter to the Central Vigilance Commission.
"The commission concurred with the views of the ministry that there were major deviations in terms of both engines and platforms," he said.
"Consequently, the ministry directed the army to float fresh international tenders for helicopters."
Another government official, who did not wish to be named, had said earlier that New Delhi was probing alleged links between an army general and Indian agents of Eurocopter.
India banned middlemen in military deals following allegations of bribery in a multi-billion-dollar artillery deal in the 1980s with Swedish firm Bofors. That scandal led to the downfall of the government of Congress prime minister Rajiv Gandhi in 1989.
Eurocopter was contracted to sell 60 helicopters in a "fly away" condition to the army while the remaining 137 were to be assembled at state-owned Hindustan Aeronautics Ltd in India, a company official said.
Eurocopter said on Thursday it had no immediate comment on the decision by the government to scrap the contract.
But late on Wednesday, Eurocopter denied Indian media allegations about the involvement of middlemen in the project.
"EADS and Eurocopter are keen on insisting that both companies fully comply with the very strict French and European regulations on these issues," Eurocopter said in a statement.
It also said it had "duly abided by and signed the pre-integrity pact that was requested by the Indian ministry of defence" before making its bid.
Eurocopter generates 54 percent of its total 3.8-billion-euro (5.4-billion-dollar) annual sales through military contracts.
The deal was suspended in June 2007 on the recommendation of a federal watchdog overseeing government purchases.
"Some aspects of the deal probed by the Central Vigilance Commission also included complaints from (US-based) Bell Helicopter that it had been rejected on flimsy grounds," a committee official had said on condition of anonymity.
Indian defence specialists selected the Eurocopter 350B3 reconnaissance model over Bell's LongRanger after an intensive testing period.
Military observers say the cancellation would hit EADS, which views India as a major client for Airbus passenger planes among other things. EADS plans to invest 2.5-billion dollars over 15 years in research and production here.
The Indian army also wants to buy 285 heavy- and medium-lift helicopters to replace the bulk of its fleet of 500 Soviet-era machines.
India, which invited tenders earlier this year for 126 fighter jets worth 10-billion dollars, has emerged as one of the biggest buyers of military equipment among developing countries.
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