Indian government clarifies company’s defence links

An Indian company linked to a controversial ammunition procurement deal in Estonia has no contracts or supply orders with India’s Ministry of Defence or the country’s armed forces, defence officials said on Monday, amid growing scrutiny of the European deal.

The clarification comes after Neco Defence Munitions, an Indian-controlled company, was linked to an ammunition procurement arrangement in Estonia involving artillery shells intended for onward delivery to Ukraine. The controversy has already led to the resignation of Estonian Defence Minister Hanno Pevkur. 

Indian defence officials said Neco Defence has no dealings with the Ministry of Defence or the Indian armed forces. They added that the company may have supplied ammunition to state police forces, as claimed on its website, but stressed that this is separate from any procurement by the central defence establishment. 

Company’s Estonia connection

The controversy centres on a €70 million ammunition procurement programme in Estonia, funded through European Union resources and intended to support Ukraine.

According to reports, Estonia’s Centre for Defence Investments entered into an arrangement with Datasel S.R.L., an Italian-registered company that was acquired by Neco Defence Munitions in 2024. The deal subsequently came under scrutiny over the supplier’s limited track record in artillery ammunition and problems surrounding delivery. 

The Indian connection in the controversy therefore relates to ownership of the company involved in the European transaction, rather than to an Indian government or Indian military procurement contract.

Estonia faces ammunition procurement controversy

The deal became a major political issue in Estonia after questions were raised over the procurement process, advance payments and the failure to deliver ammunition as expected.

Estonia reportedly paid about €70 million in advance, while subsequent problems led to disputes over the contracts and the money. The country has sought recovery of funds and has indicated that legal and arbitration proceedings could follow. 

An audit also raised wider concerns about the management of defence procurement and finances. The controversy contributed to Pevkur’s decision to resign, with the minister taking political responsibility for the outcome while maintaining that he was not personally responsible for the details of the transaction. 

No Indian military procurement link

The clarification from Indian defence officials is significant because the European controversy could otherwise create an impression that the company had an established relationship with India’s military procurement system.

Officials said that is not the case. Neco Defence has no contracts or supply orders from the Indian armed forces, nor does it have transactions with the Ministry of Defence, according to the clarification reported on Monday. 

Any reported dealings with state police organisations would fall under a different procurement framework and should not be conflated with contracts issued by the Ministry of Defence.

Questions remain over European deal

The controversy in Estonia is now focused on how the ammunition contract was awarded, the supplier’s previous manufacturing experience, the payments made and the subsequent failure to fulfil the arrangement.

Reports have said the supplier had no previous record of selling artillery ammunition when the deal was concluded. Estonia has since faced questions about procurement oversight and the use of EU funds for the Ukraine-related purchase. 

The episode has also drawn attention to the growing international defence industry, where private companies can participate in cross-border procurement through subsidiaries, acquisitions and intermediary firms.

Indian defence sector remains separate

For India, the immediate clarification from defence officials draws a line between the Estonian procurement controversy and the country’s own military acquisition system.

Neco Defence’s reported ownership of the company involved in the Estonian transaction does not establish any connection with Indian military procurement. Officials have specifically stated that there are no Ministry of Defence contracts or supply orders involving the company.

The clarification comes as Estonia continues to deal with the political and financial fallout from the ammunition controversy, while questions over the European procurement process remain under investigation.