Chile is also reported to be looking into acquiring light attack aircraft and unmanned aerial vehicles but no deals have been announced.
In September Chile was reported in talks with the Netherlands to buy at least eight Cougar helicopters earmarked for reconditioning with new avionics.
Chilean armed forces have let President Sebastian Pinera know the military's light attack capability needs to be modernized as the country faces multiple potential threats from the drug trade, cross-border smuggling of other contraband goods and human trafficking.
At least three types of light attack helicopters are under consideration and include the Eurocopter EC 635, the Bell 407 AH and the Boeing AH-6i, Defense Market Intelligence data showed.
Boeing is expected to demonstrate the AH-6i during trials mounted for the Chilean armed forces which earlier operated and trained on the MD 530.
The Eurocopter is also considered a strong contender, as it's known to both Chilean army and navy personnel. All three models have greater weapons capabilities and advanced electronics and optical equipment than the MD 530 but the competition now centers on availability, price and financial arrangements.
Jane's Defense Weekly said the military would likely approach the manufacturers to request further information.
Chile's defense requirements for 2012 were originally estimated to be in excess of $2 billion but cutbacks, Cabinet reorganization and new legislation led to several downward revisions in that estimate.
A Companies and Markets report estimated Chilean defense market value at $2.5 billion for this year, one of the largest in Latin America. However, Chilean defense expenditure declined steeply due to transfer of Carabineros de Chile and Investigations Police to the Ministry of Interior and Public Security.
The outlook for the coming years may be better, the report said. An aggressive modernization strategy, border disputes and persistent threats from drug traffickers are likely to push the country's defense expenditure to at least $4 billion by 2017.
Industry data showed the U.S. defense industry's share of Chilean defense exports is set to increase. The U.S. share of Chilean defense imports rose from 16 percent for the 2006-10 period to 30 percent for 2010 alone.
Part of the increase in Chilean defense spending has come from upgrading of armor, artillery, infantry, logistics and engineer units. Total spending in those areas is still awaiting financial data from various procurement agencies of the government.
Chile is in talks with the Netherlands to purchase eight Cougar helicopters that are likely to be reconditioned and upgraded to form part of an air cavalry brigade.
The Cougars are part of a Dutch armed forces armada that is targeted for a drawdown. Officials in the Netherlands have said the military's need for cash is behind the decision to run down the current inventory, which they see as excessive to need in peace time.
The Cougar is the Eurocopter's AS532 version, a twin-engine, medium-weight, multipurpose aircraft developed by France and built by Eurocopter and Turkish Aerospace Industries.
The AS532 is an upgrade of the Aerospatiale Puma in its militarized form and has been superseded by the Eurocopter EC725.
The secondhand helicopters, if acquired, will meet an immediate challenge for Chile, which is aiming to upgrade its armed forces' equipment as economically and fast as possible.
Some military commanders backed the idea of having all helicopters from the same manufacturer but cost considerations kept getting in the way.
Chilean army commander Gen. Juan Miguel Fuente-Alba said he favored a standardized helicopter force from a single manufacturer but that doesn't seem to be happening.
Support is also growing for a better-equipped Chilean army with its own air support backup.
El Periodista said on its website the army wants to enhance its fixed-wing capabilities and is seriously considering three to five Spartan C27J twin-engine light transport aircraft for its inventory. The aircraft costs about $53 million and is manufactured by Alenia Aeronautica of Italy.
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