"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 said.
A fresh tender will be issued early in the new financial year which begins in April, an official of the policymaking Defence Acquisition Committee said.
The deal was awarded to the European Aeronautic Defence and Space Company, (EADS), which makes civil and military aircraft, in February 2007 as part of an army modernisation programme to replace the Indian military's ageing fleet of Cheetah and Chetak helicopters.
A government official, who did not wish to be named, had told AFP earlier that New Delhi was probing links between an army general and Indian agents of Eurocopter, part of EADS.
India banned middlemen in military deals following allegations of bribery in a multi-billion dollar artillery deal in the 1980s that brought down the government of former premier Rajiv Gandhi.
Eurocopter late on Wednesday 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.
It added that it "was still confident to sign the contract with the Indian Ministry of Defence."
The deal with Eurocopter, the global leader in sales of civil and military helicopter with over 50 percent of the world market, 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.
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.
Güncelleme Tarihi: 06 Aralık 2007, 16:10