India-Linked ₹770 Cr Ammunition Deal Triggers Estonia Defence Minister’s Resignation

Estonian Defence Minister Hanno Pevkur has resigned, taking political responsibility for problems in the country’s defence sector after criticism from the National Audit Office over defence procurement and accounting.

Pevkur, who has served as defence minister since 2022, announced his decision on Wednesday and said he would hand over the portfolio to Prime Minister Kristen Michal at a time suitable for the government.

In a statement on Facebook, Pevkur said Estonia’s security was a shared responsibility and defended the record of his tenure, pointing to a sharp increase in defence spending and the expansion of the country’s military capabilities.

"A leader must have the stature and courage to take responsibility even when that responsibility is not personal, but serves the greater goal of defending the state. In other words, although a minister does not count socks and ammunition or conduct contract negotiations, the observations made by the National Audit Office, particularly regarding the activities of the Defence Forces and the Centre for Defence Investment, raise the question of political responsibility," Pevkur wrote, as per a rough translation of his resignation statement originally in Estonian.

"Therefore, I believe it is right to take political responsibility for the entire defence sector today and hand over the baton of defence minister to the Prime Minister at a time suitable for the Prime Minister," he added.

Pevkur also said that during his tenure, the defence budget of Estonia increased from 2% to more than 5% of GDP, nearly quadrupling in monetary terms. "We have increased the wartime force to 44,000 fighters and the Defence League to 30,000 members," he said, adding that the turnover of Estonia’s defence industry is approaching €1 billion.

Pevkur’s resignation comes after opposition figures and lawmakers called for him to accept political responsibility for the controversy.

According to Estonia’s public broadcaster ERR, Pevkur acknowledged that he did not personally read the disputed contracts, arguing that detailed negotiations and procurement were handled by the Estonian Centre for Defence Investments (RKIK).

₹770 Cr Ammunition Deal Dispute

The resignation follows controversy over Estonia’s attempt to procure 155mm artillery ammunition for Ukraine.

Estonia paid around €70 million (₹770 crore) upfront to Indian-linked companies that had no previous record of selling artillery shells, the ERR report said.

The procurement was backed by European Union funding and was intended to secure ammunition for Ukraine amid severe shortages caused by the war with Russia.

The deal involved an unusually tight delivery schedule and came under scrutiny after delays and concerns over the ammunition supplied, as per a report by Bloomberg (BBG).

According to a report by Firstpost, the contracts were awarded in 2024 to Datasel SRL, an Italian-registered company acquired in March 2024 by Nagpur-based Neco Defence Munitions, a subsidiary of Jayaswal NECO Group.

Contract Terminated, Companies Dispute Claims

According to the ERR report, the procurement agency later terminated the contracts and legal proceedings followed.

Estonia’s Prosecutor’s Office also opened a criminal investigation into the procurement process, per BBG.

Inspections found concerns over whether some ammunition met required standards.

Datasel, in a statement to European news platform Euractiv, has disputed Estonia’s account, saying it was “the victim” of the dispute and that no quality problems had been established during inspections.

The company said it had supplied and invoiced €58 million worth of material against €59 million in advance payments and argued that regulatory and approval delays affected the project.

Estonia is now pursuing arbitration and working with the European Commission over recovery of the funds, the Euractiv report said.