The chairman and chief executive of the Italian defence firm Finmeccanica, has formally resigned.
Giuseppe Orsi was arrested in Italy this week as part of a corruption investigation involving the sale of helicopters to the Indian government.
India has started the process of cancelling the $750m (£485m) contract.
Finmeccanica has already handed the running of the firm to another director, Alessandro Pansa, while it deals with the allegations.
Mr Orsi announced his decision to resign in a letter, in which he denied any wrongdoing and said he had always worked “for the exclusive interest of Finmeccanica and its subsidiaries”.
He said he wanted to “help to calm the atmosphere” at Finmeccanica by resigning.
Mr Orsi is facing allegations that the Italian group’s AgustaWestland unit used bribes in order to win the India contract for 12 helicopters in 2010. He denies any wrongdoing.
On Thursday, India’s defence ministry said it was freezing payments to Finmeccanica while the Central Bureau of Investigation (CBI) carried out its investigation into the aircraft deal.
According to the BBC’s Sanjoy Majumder in Delhi, the ministry has now issued a legal notice to Finmeccanica seeking to cancel the contract for the aircraft, which were to be used to transport the country’s top politicians, including the president and the prime minister.
Three of them have already been delivered, but the ministry said the contract was now on hold and no more payments would be made.
A separate inquiry has been ordered into allegations that top Indian officials may have received kickbacks to help secure the order.
Former Indian Air Force chief SP Tyagi has denied allegations that he or any of his relatives were paid bribes.