India says it will go ahead with its program to buy 197 Light Utility Helicopters for its defense forces, contrary to speculation that the AgustaWestland bribery scandal had forced the government to put the much-awaited deal on hold.

“The proposal for acquisition of 197 Light Utility Helicopters is due for consideration of the Defense Acquisition Council [DAC]. The procurement procedure has been conducted in accordance with the Defense Procurement Procedure,” Defense Minister A.K. Antony says.

The Eurocopter AS 350 Fennec and Russian Kamov 226 Sergei are the finalists for the 197 aircraft buy. The helos will go to the Indian army and air force.

The DAC, chaired by Antony, will meet soon to finalize the deal to purchase the reconnaissance and surveillance helicopters, which are estimated to cost about $1.5 billion, a defense ministry official says. The DAC deferred a decision on the LUH last month, without providing specifics.

The DAC announced the deferment just hours after the Indian government ordered a federal probe into alleged corruption in the sale of 12 AW101 VVIP helicopters to the Indian air force by AgustaWestland, the helicopter company owned by Italy’s Finmeccanica.

Though the government didn’t link the Finmeccanica controversy to the procurement delay, a senior defense ministry official said that since there was a vestige of suspicion in the whole project, the government had decided to re-examine the proposal. Complaints were recently received about alleged deviations in tender norms during user trials of the participating companies in 2010.

However, Antony said March 6 that “no formal inquiry has been instituted in the case of procurement of the 197 Light Utility Helicopters.”

AgustaWestland was also in contention for the deal, but was eliminated in the early stages on technical grounds.

Both Eurocopter and Russian Helicopters have been awaiting a final decision. The European company recently asked the defense ministry about the tender’s progress.

In 2007, the defense ministry canceled a previous deal with Eurocopter for light utility helos following allegations that bidders had failed to follow competition guidelines. A new request for proposals was issued in 2008, and flight tests of the two competing helos were completed in December 2010.

The Indian army and IAF need the light helicopters to replace their aging fleet of vintage Cheetah and Chetak aircraft, which are critical for providing supplies to troops deployed to Siachen Glacier, the world’s highest battlefield, and other high-altitude areas.

Eurocopter has offered to establish a production facility in India if the company wins the contract.

“If we win the contract it makes sense to set up a production facility here [in India], as these helos will be flown for the next 20 to 40 years and it’s important for the country to maintain them,” Eurocopter CEO Lutz Bertling said during the recent Aero India show.

AS 350 photo: AgustaWestland