Critics had accused Modi of using the 2016 multi-billion dollar accord between India and French aircraft manufacturer Dassault for Rafale aircraft to favour a key billionaire backer.

In an eagerly awaited judgement on a slew of petitions brought by activists and politicians, India's Supreme Court refused to intervene, saying it had "no doubt in the process".

"We do not find any substantial material on record to show that this is a case of commercial favouritism to any party by the Indian government," the three-judge bench said.

Dassault initially won the contract to supply 126 jets to India in 2012, with 18 to be built in France and the rest in India in collaboration with the state-owned Hindustan Aeronautics Limited (HAL).

However, during a visit to France in 2015 Modi scrapped the deal, signed under the previous government led by the Congress party, and ordered instead 36 jets -- all to be built in France -- for an estimated $9.4 billion.

- No experience -

Under Indian defence procurement rules, foreign companies winning contracts must "offset" or reinvest half the total value in joint ventures or purchases with Indian firms.

But the new agreement, formally signed in 2016, raised eyebrows because Dassault chose as its local partner Reliance, a massive conglomerate owned by billionaire Anil Ambani.

Ambani is believed to be close to Modi and Reliance had no previous experience in the aviation sector.

Former French president Francois Hollande added fuel to the fire in September with an interview with a French website when he said that Modi had pushed for Reliance to be on board.

The Modi-led right-wing ruling Bharatiya Janata Party (BJP) and French company officials have throughout denied any wrongdoing.

French Foreign Minister Jean-Yves Le Drian told an Indian newspaper ahead of a visit Friday that there was no pressure from the Indian government to choose local partners.

"We are proud of this agreement that contributes to India's security and is consolidating our strategic partnership," Le Drian, who was country's defence minister in 2016, told the Times of India.

- 'Flying coffins' -

The Hindu nationalist BJP on Friday welcomed the verdict as "a slap in the face for the politics of lies".

"Truth always triumphs!," BJP president Amit Shah tweeted.

The ruling sparked noisy scenes in the Indian parliament, with ruling and opposition members on their feet and shouting at each other.

Congress MPs demanded that a parliament committee investigate the deal as BJP parliamentarians sought an apology from Congress chief Rahul Gandhi for "lying and undermining India's national security".

Prashant Bhushan, one of the petitioners in the case, said he was considering filing a review petition against the "wrong" ruling.

New Delhi is world's largest arms importer and has been trying to revamp its ageing fleet of Russian MiG-21s -- dubbed "Flying Coffins" because of their atrocious safety record.

The first Rafale will be delivered in 2019 and the 36 jets will form two new squadrons of the Indian Air Force.

It currently has around 32 squadrons of 18 aircraft each, but has said it needs at least 42 to protect its northern and western borders with Pakistan and China.

The ruling capped an otherwise tough week for Modi after his party lost three important state elections ahead of the 2019 national polls and the central bank chief abruptly resigned in a row over government interference.

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DASSAULT AVIATION