The deal signed in 2010 with the unit of Italian defense conglomerate Finmeccanica was for 12 luxury AW-101 helicopters for use by Indian leaders and dignitaries such as the prime minister and the country's president.
The cancellation came over allegation of violation of an "integrity pact" stemming from use of agents to get the deal, the Calcutta Telegraph reported. That allegation arose after earlier reports of kickbacks.
Three of the choppers were delivered last year. But the deal for the remaining nine choppers has remained frozen as a result of the allegations.
The Telegraph said India's top law enforcement agency began investigating the role the country's former air force chief and several others in swinging deal, who have since been charged.
The BBC said officials of the Italian company have denied any wrongdoing. The Indians allegedly involved in the deal also have denied the allegations.
The Economic Times said AgustaWestland has sought arbitration, claiming India has acted unilaterally.