Hanno Pevkur took political responsibility after an EU-funded deal to supply 155mm artillery shells to Ukraine was terminated over delays and alleged quality concerns, while the Indian-owned firm involved has disputed the allegations
Estonian Defence Minister Hanno Pevkur resigned on Wednesday, taking political responsibility for a controversial €70 million (around Rs 770 crore) arms procurement deal meant to supply 155mm artillery ammunition to Ukraine, as reported by the country’s public broadcaster ERR.
The deal, funded through the European Union’s European Peace Facility (EPF), was awarded to an Italian-registered company owned by an Indian defence firm. It later became the centre of a political and legal dispute after deliveries were delayed and concerns were raised over the quality of the ammunition.
Pevkur, who had served as Estonia’s defence minister since July 2022 and was the country’s longest-serving cabinet minister, announced his resignation following a critical report by Estonia’s National Audit Office.
“Estonian security is not a one-man project. It is our joint responsibility. That is why I must take political responsibility for the entire defence field today,” Pevkur said in a social media post announcing his decision.
The Defence Ministry too confirmed his exit.
What went wrong with the deal?
The controversy dates back to contracts signed in 2024 by the Estonian Centre for Defence Investments (ECDI). The contracts were awarded to Datasel SRL, an Italian company that had been acquired in March 2024 by Nagpur-based Neco Defence Munitions, a subsidiary of Jayaswal NECO Group.
Estonia paid around €70 million upfront from EU funds to secure artillery shells at a time when Ukraine was facing a severe shortage of ammunition because of its war with Russia.
However, Estonian authorities later raised several concerns about the procurement.
Neither Datasel nor its Indian parent company had a previous record of manufacturing or supplying artillery shells when the contract was awarded. Deliveries were subsequently delayed, while some of the initial batches supplied reportedly failed to meet required quality and safety standards.
The Estonian procurement agency terminated the contract in 2025 and began legal proceedings at a European arbitration court to recover the money. Estonia’s Prosecutor’s Office also opened a criminal investigation into the procurement process.
Indian firm disputes allegations
Jayaswal NECO and Datasel have rejected allegations of wrongdoing. The companies argue that the dispute was linked to changes in European regulations and funding arrangements rather than failures in the quality of the ammunition.
Datasel has filed a counterclaim against the Estonian government, seeking damages running into tens of millions of euros over what it describes as the premature termination of the contract.
Company executives also said Datasel had delivered and invoiced goods worth €58 million after receiving €59 million in advance payments. According to the company, the goods had been inspected by Estonian officials before the government halted the contract.
The company further claimed that Estonia cancelled the agreement after saying that “EU funds had lapsed”, leaving a large quantity of completed inventory unused.
Pressure piles on Pevkur
Pevkur’s resignation comes as Estonia’s government faces a wider political challenge. The ruling coalition lost its parliamentary majority in August 2026, while opposition lawmakers had been preparing a no-confidence motion against the defence minister following questions raised by a parliamentary committee.
The government is now working with the European Commission to recover the funds involved in the failed procurement.
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