Indian government has put on hold all deals with Rolls-Royce until it completes an investigation into bribery allegations against the company, the Press Trust of India (PTI) reported.
A federal agency is probing allegations that Rolls-Royce paid bribes for supply of aircraft engines.
Rolls-Royce said it would “cooperate fully” with Indian authorities.
The company is the world’s second biggest manufacturer of aircraft engines.
India’s defense ministry had put on hold all “existing and future” contracts with Rolls-Royce pending the results of an investigation by the country’s Central Bureau of Investigation (CBI) into the purchase of jet fighter engines in a deal worth $1.6 billion, PTI reported.
The Rolls-Royce engines were supplied to the state-run Hindustan Aeronautics Limited (HAL) between 2007 and 2011, reports said.
“There was an internal vigilance report [by HAL] that suggested there were discrepancies in the deal. The CBI will look into that,” the AFP news agency quoted a defense official as saying.
A Rolls-Royce spokesman said the company would cooperate with the inquiry.
“We have repeatedly made clear that we will not tolerate misconduct of any sort,” PTI quoted the spokesman as saying.
Rolls-Royce said last year that the UK’s Serious Fraud Office (SFO) was investigating allegations of possible bribery in China and Indonesia.
Last month, two people were arrested in London as part of an SFO investigation into the firm’s activities in Asia.
The office said at the end of last year it had opened a formal investigation into the engine maker about bribery and corruption in overseas markets.
The Rolls-Royce probe is the latest controversy to hit India’s defense purchases.
[youtube X-45Z2HCNLY 650]