The FIPB has approved a proposal to assemble upgraded version of a military and civil helicopter in collaboration with the Augusta Westland, a firm which is facing corruption inquiry in India.
The Foreign Investment Promotion Board (FIPB) in its meeting on September 19 approved the proposal of Indian Rotorcraft, which is a joint venture between Tata Sons (74 per cent) and Augusta Westland (26 per cent).
As per the proposal the Indian Rotorcraft will assemble AW119Kx helicopters, an upgraded version of AW119Ke chopper. The company expects to commence production from March 2014.
The issue of corruption charges on Augusta Westland's parent company Finmeccanica came up during the FIPB meeting and it was observed that "the issue which was being investigated related to helicopter model AW101 and not this proposal", sources said.
The board, according to sources, observed in its minutes that "the law will take its own course and the current FIPB consideration is without prejudice to any existing or future civil or criminal proceedings against the foreign investor or its parent".
The proposal will now be placed before the Finance Minister for a final nod.
The Defence Ministry had issued a final show cause notice to Augusta Westland for violating the terms of the contract on October 21 and asked the Anglo Italian firm to explain why "all or any action as prescribed, including cancellation of the contract, should not be taken against them for violating the terms of the pre-integrity pact and the contract for procurement of 12 VVIP choppers".
The Attorney General has already given his opinion to the Defence Ministry that there was breach of contractual obligations and the integrity pact by the firm.
The government has already frozen the contract for supply of 12 AW-101 VVIP choppers to the IAF after allegations that Rs 360 crore was paid as bribe in which two top officials of the company were accused.