Allegations that arms manufacturer Denel paid a UK-based company to influence the Indian government to buy its products were of "grave concern", the Democratic Alliance (DA) said yesterday.

The party appealed to Denel's board and Public Enterprises Minister Alec Erwin to urgently investigate the claims, which, according to reports, had been made by Indian MPs.

"These allegations are of grave concern. Denel is already struggling to compete in the international market, and due to multibillion-rand losses, is a heavy burden on South African taxpayers," said DA public enterprises spokesman Pierre Rabie.

According to media reports, the Indian government has asked Denel for information about claims that the arms supplier had hired a British firm, Varas Associates, to use its influence in India to secure a contract for the sale of rifles worth about $3,86m.

Denel had evidently also undertaken to build an ordnance factory in India as part of the deal.

The Indian Express newspaper quoted sources as saying: "This factory was planned for the manufacture of futuristic biomodular propellant charges for heavy-calibre artillery ammunition."

Rabie said potential customers had to be assured Denel's manufacture and sale of arms was carried out in a fair and transparent manner, and in accordance with internationally accepted norms and standards of commercial practice.

"When Parliament resumes, the DA will ask (Erwin) questions in Parliament on what steps are being taken to probe these serious allegations," Rabie said.

Denel said it was in the process of responding to questions from the Indian government and declined to elaborate.

With acknowledgements to Khulu Phasiwe, Sapa and the Business Day.