In a judgement read out in the Apellate court of Milan, the judge made a brief statement that said the two had been cleared of both charges - bribery and fraud accounting.
Mr Orsi's lawyer Ennio Amodio said the judge "found no evidence of corruption, of the passage of money or that Indian officials interfered with the tender". The decision, he said, closed a case "which should have been clear to investigators (from the start)".
"No evidence has been tendered to demonstrate that the former Chief of the Indian Air Staff received money from the Anglo-Italian company. Nor the trial brought forth any elements to corroborate the theory that Marshal Tyagi had a role in paving the road to Agusta Westland in the bidding," he told NDTV.
The Central Bureau of Investigation, which is pursuing the case, said the acquittal will have "no impact on our case". "Italian authorities can appeal against the acquittal Giuseppe Orsi and Bruno Spagnolini in Supreme Court of Italy. Our investigation is independent & we have strong case against both of them," the agency said.
Mr Orsi, former chief executive of the Italian state-controlled defence group Finmeccanica, later renamed Leonardo, was arrested in 2014 and had been sentenced to four-and-a-half years in jail on charges of false accounting and bribery.
The case involves a 2007 contract signed by the government for the sale of 12 luxury helicopters for use by top leaders, including the President, Prime Minister and former prime ministers.
In 2013, the government scrapped the contract amid allegations of kickbacks amounting to Rs 362 crore paid by Finmeccanica -- with Orsi and Spagnolini at the helm -- to influence the deal.
The BJP had alleged that the initials "AP" found in the notes of a middleman referred to Ahmed Patel, Congress leader Sonia Gandhi's close aide.
In December 2016, Italy's highest court ordered a retrial of the case after Orsi and Spagnolini's conviction by a lower court was found to be erroneous.
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