NEW DELHI: India has moved to cancel a contract with Anglo-Italian firm AgustaWestland for the purchase of helicopters for VIPs following a corruption scandal, a Defense Ministry source said Wednesday.

“The Defense Ministry has issued a final show cause notice to AgustaWestland,” the top ministry source told AFP.

“They have been given 21 days to respond,” the source said of the “show cause” notice informing the company of the intended cancelation.

India suspended the 556-million-euro ($753-million) deal earlier this year after Italian investigators began looking into allegations that AgustaWestland paid bribes to win the contract. The Italian boss of AgustaWestland’s parent company Finmeccanica was arrested in February over the case, touching off a firestorm in India where the Congress-led government has been battling a string of graft scandals ahead of elections next year.

India signed the deal in 2010 for 12 helicopters from AgustaWestland, which beat competition from American and Russian rivals.

The purchase came under scrutiny from Italian investigators probing allegations the Italian group had broken the law by paying bribes to foreign officials. The company denies any wrongdoing. Indian Defense Minister A.K. Antony suspended payments to the company and threatened punitive action if any wrongdoing was uncovered. While India has already received three of the helicopters, Antony halted delivery of the remaining nine.

AgustaWestland said earlier this month that it was seeking arbitration to settle the row over the helicopters, which were intended for use by dignitaries such as the president and prime minister.

Any cancellation of the order is expected severely to hit AgustaWestland, which has a factory in southwest England. The issue was discussed by British Prime Minister David Cameron during his trip to India in February.