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India and Estonia are negotiating a defence cooperation agreement focused on co-development and co-production of military systems. Estonia has identified India as a potential supplier for military equipment, including air defence systems and artillery, amidst rising defence spending due to the Russian threat, increasing from 2% to over 5% of GDP next year.

Estonia aims for cost-effective military solutions and is interested in India's offerings, though localising weapon production remains a priority. A draft memorandum of understanding (MoU) on defence cooperation is under discussion, alongside potential agreements on agricultural cooperation. Both countries already have agreements in cyber security, trade, science, and technology.