An Indian firm caught in arms scandal that toppled Estonian defence minister

Mumbai: An Indian company landed in the middle of an arms supply scandal in Europe, which led to the resignation of the Estonian defence minister and the likely start of criminal proceedings over supply of artillery ammunition allegedly destined for Ukraine.

The scandal revolves around a contract signed in 2024 for the supply of thousands of artillery shells between an Italian entity named Datasel SRL and the Estonian Centre for Defence Investments. Datasel is owned by the Nagpur-based Neco Group.

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According to reports, Datasel has been accused of breach of the contract to supply ammunition and has been taken to arbitration by the Estonian government. The company is facing allegations that it did not completely deliver the promised ammunition and damages worth 70 million have been sought. Estonian authorities have also alleged that the equipment failed to meet quality standards.

Datasel and its Indian owners rejected the allegations and told ET that they have filed a counterclaim in Europe, seeking damages in "double-digit million euros" from the Estonian government that cancelled the contract in 2025.

Payments for the ammunition were reportedly made using funds from the European Union, with the supplies meant to be routed to Ukraine. But sources close to the company said the official contracts specified Estonia as the user of the goods and there was no mention of Ukraine anywhere in the supply agreement.

Following the controversy, Estonian defence minister Hanno Pevkur resigned, taking "political responsibility" for the alleged procurement failures.

When contacted by ET, Datasel director Siddharth Jaiswal denied any breach of contract. He said his company filed a counterclaim against the Estonian government for breach of contract, citing extensive completed inventory and work-in-progress stock currently sitting idle. The next legal hearing is scheduled for next month, he said. Jaiswal claimed that the Estonian side issued a contract cancellation in 2025. "We received the cancellation saying that 'funds have lapsed - we don't have funds'," Jaiswal said.

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Between late 2024 and 2025, multiple contracts totalling close to 150 million were signed between Datasel and the Estonian Centre for Defence Investments, the company representative said. He claimed that Datasel received 59 million, and the Estonian authorities took deliveries of goods worth 58 million in 2025.