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Chief of Defense Staff Gen. Bipin Rawat died along with his wife, Madhulika Rawat, the IAF said via Twitter. He had been in the post for almost two years.
The helicopter, which had a crew of four, crashed near Coonoor in Tamil Nadu state while en route from Sulur to the town of Wellington in Tamil Nadu, the IAF said.
The survivor, Group Capt. Varun Singh, is being treated for his injuries at the Military Hospital in Wellington, the IAF said.
The cause of the crash is not yet known. The IAF said "an inquiry has been ordered to ascertain the cause of the accident."
Rawat was appointed India's first Chief of Defense Staff in December 2019. Prior to that, he served as the Chief of Army Staff for close to three years.
During a career spanning more than 40 years, Rawat commanded several battalions for the Indian army. He had received several awards for his service. He was first commissioned into the Indian Army in December 1978.
A statement released by the Indian Army described Gen. Rawat as "a visionary who initiated far reaching reforms in the Indian military's higher defense organization" and his wife as "an epitome of grace whose presence will be missed by everyone."
"They served India with utmost diligence. My thoughts are with the bereaved families," he said. "Gen Bipin Rawat was an outstanding soldier. A true patriot, he greatly contributed to modernising our armed forces and security apparatus. His insights and perspectives on strategic matters were exceptional. His passing away has saddened me deeply."
"The nation has lost one of its bravest sons. His four decades of selfless service to the motherland was marked by exceptional gallantry and heroism," he tweeted.
India's Defense Minister Rajnath Singh and Chief of Army Staff Gen. Manoj Mukund Naravane visited Rawat's residence in New Delhi before his death was confirmed.
"Deeply anguished by the sudden demise of Chief of Defense Staff Gen Bipin Rawat, his wife and 11 other Armed Forces personnel in an extremely unfortunate helicopter accident today in Tamil Nadu. His untimely death is an irreparable loss to our Armed Forces and the country," he wrote.
"General Rawat had served the country with exceptional courage and diligence. As the first Chief of Defence Staff he had prepared plans for jointness of our Armed Forces."
Singh said he was praying for a speedy recovery for the officer who survived the crash.
The Indian Army said the 11 military personnel who had died alongside Gen. Rawat and his wife would "also be equally missed by everyone."
CORRECTION: This story has been updated to correct the Indian President's name.
CNN's Swati Gupta and Vedika Sud reported from New Delhi, while Laura Smith-Spark wrote from London and Rhea Mogul from Hong Kong.