India will not sign any new contracts with Italian aerospace giant Finmeccanica but will honour existing ones, a defence ministry source said Tuesday, after a chopper deal was scrapped over a bribery scandal.
India cancelled a 556-million-euro ($753-million) deal in January to buy 12 luxury helicopters from AgustaWestland, which is owned by Finmeccanica, after Italian investigators began looking into accusations that the company paid bribes to win the contract in 2010.
"The contracts that are already underway will not be stopped but fresh contracts will not be allowed till further orders," a defence ministry source told AFP on condition of anonymity.
"Any firm under the Finmeccanica group of companies won't be given tender papers for bidding," he added.
The chopper scandal is one of the several corruption allegations that have either stalled or delayed India's defence procurement.
Italian prosecutors suspect kickbacks worth around 10 percent of the deal — $67.6 million (50 million euros) — were paid to Indian officials to swing the deal in favour of AgustaWestland, according to Italian media reports.
India's defence ministry also came under scrutiny after detectives raided the home of former air force chief S.P. Tyagi as part of the probe into the allegations of bribery.
Finmeccanica, which has denied any wrongdoing, could not be reached for comment.
India, the world's largest arms importer, recently proposed increasing the limit on foreign direct investment in defence industries to 49 percent from 26 percent.
India is in the midst of a $100-billion defence upgrade programme.
