Defence Ministry today scrapped a scam-tainted tender worth over Rs 6,000 crore to procure 197 light utility helicopters for Army and Air Force to replace the vintage fleet of Cheetah and Chetak choppers used to move troops and equipment to high altitude locations like Siachen.

In a meeting of the Defence Acquisition Council headed by Defence Minister Arun Jaitley, the government also cleared proposals worth over Rs 17,500 crore including the mid-life upgrade of the aging fleet of submarines for Rs 4,800 crore and procurement of 118 Arjun Mk II tanks for Rs 6,600 crore.

The DAC decided to retract from the tender for procuring 197 helicopters and it has been decided that the Indian industry would be given the opportunity to produce around 400 such choppers for the requirements of the armed forces, Defence Ministry sources said here.

In line with NDA government's plan to develop the indigenous industry, the government decision is expected to generate business worth over Rs 40,0000 crore for the local industry in the defence sector, they said.

This is the second time in seven years that the tender has been scrapped in which European Eurocopter and Russian Kamov were competing and it had been on hold for the past over two years due to an ongoing CBI probe and other allegations of wrongdoings in the trial process.

The CBI probe was ordered into the deal in view of allegations in the AgustaWestland chopper scam that a Brigadier had asked for a bribe of Rs 30 crore from the Anglo-Italian firm for helping it in the light chopper deal.

AgustaWestland was eliminated in the first round of the deal and only Eurocopter and Kamov were left in the race. The tender was cancelled in 2007 in the last stage against the backdrop of allegations of wrongdoings.

The DAC also cleared a proposal for buying 40 Arjun tank chassis-based catapult artillery systems for Rs 820 crore, and gave its nod for setting up dedicated mobile communication systems for Army troops deployed along the China border under Tezpur-based 4 Corps, Dimapur-based 3 Corps and Leh-based 14 Corps.

The meeting also gave a go ahead to the Navy to open the bids of the tender for procuring 16 multi-role helicopters in a deal in which American Sikorsky and European NH Industries, which includes AgustaWestland, are in contention.

The decision to give the go ahead for opening the bids of the two competitors in the race was taken after the Defence Ministry issued guidelines for dealing with cases involving Italian Finmeccannica defence group and its subsidiary companies.

The meeting also deferred its decision on the Rs 15,000 crore Army proposal for procuring the Israeli 'Spike' anti-tank guided missiles against the backdrop of American offer to jointly produce the Javelin missiles for the same purpose.

The Defence Ministry's apex body for procurement cases also cleared proposal for offsets deviations in the Rs 15,0000 crore deal for buying 15 Chinook and 22 Apache attack helicopters from the US.

The ministry further cleared a Rs 1700 crore proposal for anti-submarine warfare suite for Navy's warships built under Project 7 A and Project-15B warships indigenously.