Indian investigators Friday arrested the country's former air force chief S. P. Tyagi over a scandal-hit deal with Anglo-Italian firm AgustaWestland to supply high-end helicopters to India.

India suspended the deal in 2013 following accusations AgustaWestland paid bribes to win the contract for 12 helicopters intended for use by the prime minister and other VIPs.

India's Central Bureau of Investigation arrested Tyagi in New Delhi over his alleged role in bribing officials to swing the deal in favour of AgustaWestland.

“An investigation was going on and yes we have arrested him,” Kanchan Prasad, a spokeswoman for CBI told AFP.

The 556-million-euro deal is also being investigated separately by Italian authorities, with the boss of AgustaWestland's parent company Finmeccanica being arrested in 2013.

Italian prosecutors suspect kickbacks worth about 10 per cent of the deal - 50 million euros - were paid to Indian officials as bribes.

Indian detectives had raided the home of Tyagi in 2013 as they investigated allegations of bribery. Tyagi and Finmeccanica have denied any wrongdoing.

India has already received three of the helicopters, intended to be used by such dignitaries as the prime minister and the president, but delivery of the remaining nine has been scrapped.

The deal was signed under India's previous Congress-led government led by Manmohan Singh.