The Indian Ministry of Defense is pondering a $1.5 billion deal for 197 light utility helicopters.

The hotly contested Indian contract for the helicopters is facing cancellation for the second time as the decision has been deferred by the Ministry of Defense's Defense Acquisition Council.

The Indian air force is looking to replace its Cheetah and Chetak helicopters, which were bought nearly four decades ago. Battling for the contract are France's Eurocopter's Fennec and the Russian Federation's Kamov Ka-226T, The Indian Express reported.

The helicopters that the air force is seeking to replace, France's Aerospatiale SA 315B Lama Cheetah and Chetak, are single-engined aircraft specifically developed to meet Indian air force operational requirements. They were built under a joint venture license between India's Hindustan Aeronautics Ltd. and Aerospatiale.

The Chetak was designed specifically for high-altitude performance and was tested in the Himalayas.

The helicopter was ordered by the Indian military and a license to produce the SA315B in Bangalore was granted to HAL in 1971. The first Indian-built SA315B flew October 1972 with deliveries beginning three months later.

Indian Defense Ministry sources, speaking on condition of anonymity, told the Express that "both the Eurocopter's Fennec and its competitor, the Russian Kamov Ka-226T, have not completely met the specification."

A technical panel has studied the issue and made recommendations to the ministry.

For nearly 10 years, the Indian army has been trying to replace its Cheetah and Chetak helicopters.

In 2007, an Indian Defense Ministry tender for 197 helicopters had progressed sufficiently where the Eurocopter AS 550 Fennec had emerged as the winner. In the fresh tender issued in July 2008, however, two helicopters were subsequently short-listed for flight evaluation, the single-engine Eurocopter AS550 C3 Fennec and the twin engine Russian Federation-built Kamov-226 Sergei.

Further complicating India's helicopter acquisition policies, Italian firm Finmeccanica, which has become embroiled in a controversy over alleged kickbacks in a helicopter deal for government use, has at least six companies registered in India. Up to now, none of Finmeccanica six firms involved in the helicopter contract have been charged by the Corporate Affairs Ministry with violating the Companies Act.

The Finmeccanica entities are AgustaWestland India Private Ltd., WIN Bluewater Services Private Ltd., Fata Hunter India Private Ltd., Asia Power Projects Private Ltd., Ansaldo STS Transportation Systems Private Ltd. and Selex Galileo India Private Ltd., a 2012 Finmeccanica Interim Financial Report stated.

Sources in the Corporate Affairs Ministry, speaking on condition of anonymity said: "We cannot chase companies just like that ... We will look into the (affairs) of registered companies only if there is a substantial case of violations of Companies Act. It is too premature to say whether (those) companies have violated the Companies Act."

Indian Defense Minister AK Antony on the issue of possible bribes noted: "The moment we get a report from the Central Bureau of Investigation, whoever is found guilty, Indian or foreigner, we will take the strongest action against them. They have to pay the price for the lapses. Nobody will be spared."