AgustaWestland deal on agenda during Prime Minister's India trade mission

The controversial AgustaWestland deal is expected to be on the agenda as Prime Minister David Cameron starts talks in India tomorrow.

Mr Cameron, on a three-day visit to the country as head of a trade mission, will meet Indian president Pranab Mukherjee and prime minister Manmohan Singh.

In 2010, AgustaWestland won a £500 million contract to supply the Indian Government with 12 AW101 helicopters.

Italian authorities are reported to suspect that the alleged bribes were paid to ensure AgustaWestland won the contract.

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The chairman and chief executive of the Italian defence firm Finmeccanica, which owns AgustaWestland, has quit following his arrest as part of a corruption investigation involving the sale of helicopters to the Indian government.

Giuseppe Orsi denied any wrongdoing and said he had always worked “for the exclusive interest of Finmeccanica and its subsidiaries”.

India has started the process of cancelling the $750million (£485 million) contract with the Yeovil-based firm, though three helicopters have been delivered.

Finmeccanica has already handed the running of the firm to another director, Alessandro Pansa, while it deals with the allegations.

The Times of India newspaper reports that although the controversial deal was not on the original agenda Indian foreign minister Salman Khurshid told journalists it would now feature prominently. Khurshid also indicated that the Indian government had not taken a final decision on cancelling the VVIP contract. “We are within our rights to issue a show-cause notice," he told The Times of India.

There appears to be a review about the wisdom of axing the helicopters rather than going after the offenders.

AgustaWestland employs around 3,200 permanent staff at Yeovil.

The company is hoping to increase its international business so that it is less reliant on UK Ministry of Defence work at a time when budgets are shrinking.

Guy Anderson, a defence industry analyst at IHS Jane’s, said India was a key market for Finmeccanica.

“Long-term suspension from the Indian defence and security markets would have significant consequences for Finmeccanica in general and its aerospace units in particular, given that the Italian company is pursuing opportunities valued at more than $12billion as of 2013.

“At present, AgustaWestland is a contender to meet the $250million Indian Navy Light Utility Helicopter programme [and] the Indian Navy Multirole Helicopter requirement.”

Mr Cameron's three-day visit would include the UK hosting a meeting between the Pakistan and Afghanistan presidents. The PM also wants to use the trip to correct any misunderstandings about his Government's move to bring immigration numbers under control.