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New Delhi: Prime Minister Manmohan Singh said on Monday that the government has nothing to hide in the controversial procurement of helicopters by the defence ministry from AugustaWestland, a subsidiary of Italian defence company Finmeccanica SpA, and that it is ready to discuss the matter in Parliament.

Singh’s statement, his first on the matter since the controversy over the 3,600 crore deal erupted, came three days before the start of Parliament’s budget session.

The defence ministry has said it will scrap the helicopter deal and issued notices to AugustaWestland over alleged kickbacks paid to procure the contract, signed in 2010. AgustaWestland has said it will comply with the request to provide clarification within seven days.

The ministry acted after opposition parties launched a fresh attack on the Congress party-led government and threatened to press it for answers in the budget session.

The government also ordered a Central Bureau of Investigation (CBI) probe into the deal last week after Giuseppe Orsi, chief executive officer of Finmeccanica, was arrested in Rome over suspected corruption in the deal to sell helicopters to India to ferry important government functionaries.

The case, which escalated last week with the arrest of Orsi, is putting pressure on India’s government and has become a political issue in Italy less than a week from a general election.

India has already received three of the 12 helicopters it bought to transport political leaders.

In his first comments on the affair since the arrest of Orsi, who has since been replaced at Finmeccanica, Singh said the Indian government wanted to debate the issue in Parliament.

“Parliament is the appropriate forum to discuss all issues raised by the opposition. We are ready for any discussion," Singh told reporters. “We have nothing to hide."

The furore over the helicopter deal follows a string of graft cases that have buffeted Singh’s government, which faces elections due by early 2014. The opposition is expected to raise the issue once Parliament opens.

The decision to send a show-cause notice to Finmeccanica, the first step toward scrapping the deal, was taken partly to fend off expected political pressure in Parliament, a defence ministry official said on condition of anonymity.

Pressure is building in Italy too, where the Finmeccanica case adds to a string of high-profile corporate probes into possible bribery reminiscent of the scandals that devastated Italy 20 years ago.

State-controlled Finmeccanica, Italy’s second-largest employer after Fiat, could be blacklisted for several years in India if the government scraps the deal, potentially putting at risk some $12 billion in defence contracts being chased by the Italian defence group.

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