India cancels $600 mln chopper deal with EADS

NEW DELHI (Reuters) - India has cancelled a $600-million deal to buy 197 military helicopters from EADS and may offer the contract to other bidders, the defense ministry said on Friday.

Besides being a setback for EADS, the European maker of the Airbus family of commercial jets, the deal’s collapse on Thursday will also further delay India’s plans to replace its ageing helicopter fleet by at least two years, newspapers said.

“We will issue a fresh request for proposals in the next two or three months,” said Sitanshu Kar, a defence ministry spokesman.

The deal collapsed amid newspaper reports of irregularities in the bidding process and the illegal use of middle men.

EADS says it complies with all French and European regulations concerning the bidding and evaluating process and the use of middlemen.

Kar said the ministry was not commenting on why the deal collapsed.

“But you’ve seen the newspaper reports -- they’re more or less correct,” he added.

India originally put out the tender in 2001, and Eurocopter, a division of EADS, was chosen in February this year, beating a proposal by the Bell helicopter unit of U.S.-based Textron Inc.

EADS’ India office declined any comment.

Reporting by Jonathan Allen; Editing by Sanjeev Miglani