Mr Mukherjee has ordered an inquiry

Reports in a South African newspaper alleged that Denel had paid money to secure confidential documents relating to Indian arms purchases.

Denel has denied the allegations and described the reports as "ridiculous" the Press Trust of India reports.

Denel secured a contract to supply rifles to Indian in 2003.

"Defence Minister Pranab Mukherjee has ordered that the matter relating to the acquisition of arms from M/S Denel of South Africa should be thoroughly enquired into and placed before him at the earliest," an Indian defence ministry spokesman said in a statement.

The contract for the rifles was signed under the previous BJP-led Indian government and is estimated to be worth 210 million rupees ($4.8m).

'Serious matter'

The issue has been raised in the Indian parliament with MPs from the governing Congress Party and the Communist Party of India (Marxist) calling for an investigation into the allegations.

"It is a serious matter," Communist MP Nilotpal Basu told journalists in Delhi.

"The government will get the matter looked into thoroughly," junior Minister of Parliamentary Affairs Suresh Patchouri told the upper house of parliament on Thursday.