Tallinn/New Delhi: Estonia's Defence Minister Hanno Pevkur has resigned, taking political responsibility following scrutiny of a roughly €70 million (over ₹768 crore) ammunition procurement programme intended to supply artillery shells to Ukraine.
At the centre of the controversy is Datasel SRL, an Italy-registered company acquired in 2024 by India's Neco Defence Munitions. Estonia's Centre for Defence Investments (RKIK) signed multiple contracts with Datasel in 2024, with around ₹768 crore reportedly paid in advance using funding linked to the EU's European Peace Facility.
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The controversy intensified after deliveries were delayed and Estonia raised concerns over whether the ammunition supplied met contractual requirements. Estonia subsequently terminated the contracts and is seeking recovery of funds, with the dispute now proceeding through legal and arbitration channels.
Estonian officials have acknowledged that Datasel did not have an established track record of producing or selling artillery ammunition when the contracts were signed. The country's National Audit Office also criticised weaknesses in defence procurement, contract monitoring and financial controls.
Datasel, however, disputes Estonia's characterisation of the contract. The company says it supplied a substantial quantity of material, invoiced around ₹647 crore and remains willing to fulfil its obligations. It has also attributed delays partly to complex international approvals and supply-chain requirements.
The episode highlights a difficult balance facing European countries: the urgency of supplying Ukraine with ammunition versus the need for rigorous defence-procurement due diligence.
For Estonia, the financial stakes are significant. The National Audit Office warned that the country could ultimately face a budgetary impact of around ₹768-Crore if the funds cannot be recovered.
For the European Union, the case also raises questions about safeguards surrounding military assistance financed through the European Peace Facility.
For India's defence industry, the controversy has international significance because of Neco Defence's ownership of Datasel. However, the ongoing contractual dispute does not by itself establish fraud or wrongdoing by the Indian company.
Pevkur has maintained that individual procurement negotiations are handled by Estonia's defence-investment authorities rather than personally by the minister. Nevertheless, he chose to accept political responsibility for problems within the defence establishment and resigned.
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