The Government of India has decided to cancel the scam-hit deal to buy 12 helicopters from Anglo-Italian company AgustaWestland, after a failed meeting of defence ministry officials and executives of the company, reports quoting official sources said.
The deal to acquire 12 AW101 helicopters for VVIP use got derailed in February after the Italian police arrested the then-chief executive of Finmeccanica, the parent company of AgustaWestland, for allegedly paying bribes to secure the deal.
India, subsequently, decided to freeze payments to the company.
India has already paid more than Rs1,300 crore to AgustaWestland. The contract was suspended in February following the kickback scandal.
The defence ministry had, on 23 October, issued a final show-cause notice to AgustaWestland as to why the controversial Rs3,760-crore contract to supply 12 choppers to the Indian Air Force should not be cancelled.
Investigating agencies of both Italy and India were looking into allegations that the firm bribed former Air Chief SP Tyagi to change the tender requirements and paid middlemen more than Rs450 crore in kick-backs to clinch the deal.
Defence ministry officials saw little chance of salvaging the deal and said AgustaWestland officials were just trying to save face.
''This is just a face-saving exercise by Agusta. But the government has already decided to cancel the deal because they have violated the integrity pact," said sources.
The decision to cancel the deal is expected to give some respite to an embarrassed government that is facing elections in five states and is heading for elections under a cloud of corruption scandals.
If the deal is cancelled, IAF may return the three AW-101s it has taken delivery of and are parked in IAF hangars.
Meanwhile, reports said, the IAF is considering going back to Russia to acquire new VVIP fleet to replace its ageing Mi-8 choppers.