NEW DELHI (AFP) - India on Tuesday said it was dropping a graft case against an Italian involved in the arms scandal with Swedish firm Bofors, the Press Trust of India reported.

Solicitor General Gopal Subramanium told the supreme court the case against Italian businessman Ottavio Quattrocchi would be dropped, the news agency said.

The scandal, dating back to 1986, centred around accusations Quattrocchi and many others took 1.3 billion dollars of bribes from Swedish firm AB Bofors for brokering the sale of 400 field guns to India.

Controversy over the deal helped topple Gandhi's government at elections three years later.

In 2004, the Delhi high court cleared Gandhi of any wrongdoing but federal investigators later pursued the case against Quattrocchi.

Attempts to extradite Quattrocchi from Argentina failed in 2007.

Following Tuesday's announcement, the opposition BJP party accused the Congress-led government of trying to finally bury the scandal.

But Congress spokesman Manish Tiwari said: "There needs to be a closure of the case. Since 1989 it has been going on. People have been trying to milk it for propaganda."

Swedish defense firm Bofors was founded in 1873. In 2000 American United Defense Industries acquired Bofors Weapons Systems while Saab retained the missile interests.

The alleged but never proven kickbacks involved in securing a contract with the Indian Army in 1986 made the Swedish firm lose much of its reputation in Sweden.