For the first time since the mid-1990s, sales of the 100 biggest arms dealers excluding China declined in 2011 as the economic crisis prompted budget cuts, a Stockholm-based think tank said on Monday.

The 100 companies' total sales declined, including inflation, by five percent from the previous year, the first time a drop has been registered since 1994, the Stockholm International Peace Research Institute (SIPRI) said.

Even excluding inflation, the total fell, to $410 billion (307 billion euros) from 412 billion euros in 2010.

"Austerity policies and proposed and actual decreases in military expenditure as well as postponements in weapons programme procurement affected overall arms sales in North America and Western Europe," SIPRI said in a statement.

Troop drawdowns in Iraq and Afghanistan and sanctions on arms transfers to Libya also played a role in the decline, it added.

Proposed austerity measures "have led some companies to pursue military specialisation, while others have downsized or diversified into adjacent markets" such as security and in particular cyber security, the think tank said.

The SIPRI figures do not include China due to a lack of reliable data. Chinese companies supply a military that enjoys the world's second-biggest budget.

The list of top 100 arms-producing companies is dominated by American and European companies, which respectively hold 60 and 29 percent of the global market and together hold the top 17 spots on the list.

US group Lockheed Martin is number one, with sales of $36.3 billion in 2011, ahead of another US group, Boeing, and BAE Systems of Britain in third place.

The think tank, which is specialised in research on conflicts, weapons, arms control and disarmament, was created in 1966 and is 50-percent financed by the Swedish state.

It defines arms sales as "sales of military goods and services to military customers, including both sales for domestic procurement and sales for export."

Italy helicopter company in bribe probe says it is clean
Rome (AFP) Feb 16, 2013 - AgustaWestland, a unit of Italian aerospace group Finmeccanica, said Saturday that it was complying with India's request for clarifications over a bribery scandal and had fully respected the law.

"AgustaWestland is confident that the full compliance with the relevant laws as well as the good conduct of its past and present senior executives and managers will be demonstrated as soon as practicable," it said in a note.

India on Friday had said it had taken steps to cancel a $748 million contract for 12 helicopters from AustaWestland amid allegations the deal was won through bribes of up to 50 million euros ($66 million).

The ministry of defence said it had "initiated action for cancellation" of the contract and asked the Italian firm to "reply within seven days" if terms of the contract and an "integrity pact" it signed in 2010 had been violated.

AgustaWestland confirmed that the ministry had "given notice requesting information within seven days", and said it was compling with the request.

The scandal toppled the head of the head of the suspected defence company, Giuseppe Orsi, who resigned from behind prison bars in Italy on Friday.

The former head of AgustaWestland, Bruno Spagnolini, is also behind bars.

India, which has put payments to the company on hold, has already received three of the choppers. The rest were to be delivered by the end of 2014.

The purchase came under scrutiny from Italian investigators probing allegations the group had broken the law by paying bribes to foreign officials.

Italian prosecutors suspect that kickbacks worth up to 10 percent of the deal were paid to Indian officials to ensure AgustaWestland won the contract.

Cash was allegedly handed to a cousin of former Indian air force chief S.P. Tyagi, who denies wrongdoing, with more money funnelled via a web of middlemen and companies in London, Switzerland, Tunisia and Mauritius, press reports say.

Orsi denies any wrongdoing and his lawyer has called the allegations against him "inconsistent" and his arrest "unjustified".