AgustaWestland probe may threaten Indian military modernisation plans, senior officers warn

India's military modernisation could be threatened if the government responds to corruption allegations surrounding the purchase of 12 AgustaWestland AW101 helicopters by banning Italian parent company Finmeccanica from the national market.

Concerned service officers told IHS Jane's that proscribing AgustaWestland or Finmeccanica, which is under "serious" consideration by the Ministry of Defence (MoD), will degrade the country's operational preparedness.

"The MoD's move to cancel the helicopter contract is the first step in blacklisting its manufacturer," a senior military officer said.

On 12 February the MoD ordered a Central Bureau of Investigation (CBI) inquiry into the USD750 million helicopter purchase. On 15 February it issued a notice to AgustaWestland seeking cancellation of the AW101 deal and gave the company seven days to respond.

This followed the arrest by Italian police of Finmeccanica chief executive officer (CEO) Giuseppe Orsi and AgustaWestland CEO Bruno Spagnolini for allegedly using agents to bribe senior Indian officials to obtain the helicopter contract.

The MoD has also withheld all future payments to AgustaWestland for the AW101s, which were intended for the Indian Air Force's (IAF's) VIP squadron. Company officials have denied any wrongdoing and claimed on 16 February that the helicopter contract remains valid.