Is Adani Doing Tax Erosion?

Introducing An Empire Under Scrutiny…

India has watched Gautam Adani’s business empire grow from a small trading house into a sprawling conglomerate that operates ports, airports, coal mines, power plants, defence manufacturing units and even media networks. Over the past two decades the group has benefitted from aggressive deregulation and policies designed to encourage private investment. The group’s success is often presented as a symbol of India’s economic rise.

Yet there is a darker narrative developing behind the glossy advertisements and market‑defying stock valuations. A series of investigations by government agencies, foreign regulators and independent journalists has raised troubling questions about whether the Adani Group has been enriching itself at the expense of Indian taxpayers, consumers and the environment. These allegations include customs duty evasion, over‑invoicing of imported commodities, stock price manipulation, opaque related‑party transactions, and even bribery schemes to secure contracts.

Instead of merely repeating charges, it traces the historical context, describes evidence unearthed by investigative reporters, and asks why Indian regulators appear reluctant to take decisive action. The stakes are enormous; if the allegations are true, the losses are not limited to investor confidence but extend to higher electricity tariffs for Indian households, more pollution and a distortion of democracy itself. Whether one believes the accusations or not, the lack of transparent answers from the Adani Group and the slow pace of investigations warrant serious concern.

The discussion begins with the most recent probe into tax evasion involving the group’s defence arm, and then delves into past controversies dating back to the 1990s. The article ends by asking how India’s regulatory inertia has allowed such a powerful conglomerate to flourish despite repeated red flags.

Current Probe: Customs Duty Evasion on Missile Parts

In October 2025 a Reuters report revealed that India’s Directorate of Revenue Intelligence (DRI) had been investigating Adani Defence Systems and Technologies, a subsidiary of Adani Enterprises, for allegedly evading about ₹770 million rupees (roughly US$9 million) in import duties. According to the report, Adani Defence imported components used in short‑range surface‑to‑air missiles but misclassified them as parts for long‑range missiles, which were exempt from import duties under existing rules. The misclassification allowed the company to claim duty exemptions and avoid paying both a 10 percent import tax and an 18 percent local tax.

Several aspects of the investigation are striking:

Scope and Timing: The case came to light in 2025, years after other allegations against the group had emerged. It indicates that regulatory scrutiny of Adani companies continues despite earlier clearances. Reuters noted that the alleged ₹770 million of tax evaded represented more than 10 percent of Adani Defence’s revenue for the 2024‑25 fiscal year and more than half its profit, a substantial sum for a relatively small subsidiary.

Adani’s Response: The Adani Group said the DRI had merely sought clarifications on how the company interpreted customs rules and that the firm had provided all necessary documents, leading Adani’s spokesperson to claim that “the issue stands closed”. That remark implies that the group does not acknowledge any wrongdoing or liability for the duties that the DRI believes should have been paid.

Potential Penalties: The report noted that companies found to have evaded duties are typically liable to pay the amount evaded plus a 100 percent penalty. If applied, this rule would raise Adani Defence’s liability to about US$18 million; yet there is no public information indicating the company has paid anything.

Misclassification Admission: One government source told Reuters that Adani executives admitted during the investigation that they had misclassified the imported parts. Such an admission, if documented, suggests that the misclassification was not merely a technical error but a conscious act. Adani declined to comment when Reuters asked about this assertion.

The case demonstrates the way seemingly minor tweaks to import classifications can generate huge tax benefits. It also shows how companies with strong political connections can attempt to pre‑empt public scrutiny by declaring matters closed while investigations continue. Importantly, the DRI’s probe is not an isolated incident but part of a pattern of customs‑related allegations dating back decades.

Long‑Standing Allegations of Over‑Invoicing and Customs Fraud

The 2025 tax‑evasion probe forms only one chapter in a long saga of customs investigations involving the Adani Group. In 2014 the DRI opened investigations into whether Adani Group companies and others used offshore intermediaries to over‑invoice coal imported from Indonesia. Over‑invoicing is a scheme in which goods are bought at a low price but billed to an end customer at a much higher price using shell companies in tax havens. The difference in price can then be diverted to private accounts or used to inflate tariff payments.

Evidence of Over‑Invoicing in Coal Imports

A 2024 investigation by the Organized Crime and Corruption Reporting Project (OCCRP) obtained documents that the DRI had sought but been unable to access due to court orders. The investigation focused on shipments of coal that passed through the British Virgin Islands and Singapore before reaching India. On one voyage, the cargo left Indonesia at US$28 per tonne but was ultimately sold to Tamil Nadu’s state electricity utility for US$91.91 per tonne. OCCRP reporters verified at least 24 shipments from 2014 that followed the same pattern where a low price recorded at the mine and a dramatically higher price billed by Adani to the Indian utility.

The evidence comprised invoices and banking documents from several jurisdictions. One Indonesian miner, Jhonlin, sold coal to a British Virgin Islands‑registered middleman, Supreme Union Investors Ltd, for US$28 per tonne. Supreme Union then issued an invoice to Adani Global Pte in Singapore for US$33.75 per tonne, still reflecting low‑quality coal.

Adani Global subsequently invoiced the Tamil Nadu utility at US$91.91 per tonne and declared the coal to be high‑quality with calorific value of 6,000 kcal/kg. No evidence was found that the quality actually improved during shipment; in fact, the Indonesian miner’s own data suggested it never supplied coal above 4,200 kcal/kg. Tim Buckley of Climate Energy Finance told OCCRP that over‑invoicing not only causes consumers to pay more for electricity but also forces power producers to burn more coal, worsening pollution.

The DRI’s broader case, according to OCCRP, alleged that companies used multiple intermediaries in Singapore, Hong Kong, Dubai and the British Virgin Islands to channel invoices before billing the buyer. Investigators discovered two sets of test reports for coal consignments, one showing a lower calorific value and another showing a higher value. Such “dual documentation” suggests a concerted effort to conceal the true quality and price of the imports.

Court Battles and Regulatory Inertia

The DRI’s attempt to gather documents from foreign jurisdictions was frustrated when Adani Group challenged the agency’s requests in the Bombay High Court. The court ruled in Adani’s favour in 2019, effectively stalling the probe. The DRI appealed to India’s Supreme Court, but progress has been glacial; according to OCCRP, Adani took three years to file a counter‑affidavit, and the case remains unresolved. Meanwhile, opposition politicians demanded a fresh investigation after the Financial Times reported that Adani paid over US$5 billion to middlemen for coal priced far above market rates between 2021 and 2023.

Such judicial delays have effectively thwarted regulators. Without access to shipping documents or bank records, the DRI cannot determine whether over‑invoicing occurred. This legal stalemate allows the Adani Group to declare itself vindicated while the underlying questions remain unanswered. Importantly, the OCCRP investigation shows that when journalists obtained the very documents that regulators sought, the evidence pointed to serious irregularities.

Alleged Over‑Invoicing of Power Equipment

The coal case is not the only example of alleged over‑invoicing. The DRI issued a 2016 notice alleging that Adani Power companies inflated the declared value of equipment for two thermal power plants in Maharashtra and Rajasthan by using offshore intermediaries. While the details are not easily accessible due to court restrictions, the notice reportedly cited over‑invoicing to the tune of ₹39.74 billion (about US$800 million) and described a scheme involving two sets of test reports. Eventually the adjudicating authority dismissed the DRI’s findings in 2017, but appeals and counter‑appeals continue. The allegation matters because artificially inflating the cost of imported power equipment can justify higher tariffs for electricity consumers, effectively extracting money from the public through inflated bills.

Although the DRI’s case has been bogged down in litigation, the allegations underscore a pattern where the use of offshore entities, suspiciously high pricing and complex documentation to inflate costs and siphon funds. Whether the case is ultimately proven in court or not, the recurring nature of such allegations against Adani companies warrants closer scrutiny.

Earlier Scandals: Diamonds, Naphtha and Customs Duty Evasion

The Adani Group’s history of run‑ins with customs authorities predates the coal and power equipment cases. Investigative records show that in the early 2000s the group was involved in a diamond trading scheme that relied on circular trading between related companies to claim export credits. Family members were implicated in the scheme but later promoted within the group.

The Diamond Trading Scheme and the Role of Family Members

Investigators from the DRI alleged that Gautam Adani’s younger brother, Rajesh Adani, played a central role in a fraudulent diamond trading operation between 2004 and 2006. According to witness statements, policy decisions regarding imports and exports of gold and diamonds for Adani Exports Ltd (later renamed Adani Enterprises) were taken in consultation with Rajesh Adani.

The scheme allegedly involved using front companies to make fake exports and imports of cut and polished diamonds at inflated values, thereby claiming subsidies and duty drawbacks from the government. Rajesh was arrested twice on unrelated allegations: once in 1999 over customs tax evasion and forged import documents for coal imports, and again in 2010 for undervaluation of naphtha and petroleum products. Despite these arrests, he currently serves as the managing director of the Adani Group.

The DRI also named Gautam Adani’s brother‑in‑law, Samir Vora, as a ringleader of the diamond trading scam. Witnesses testified that Vora oversaw the pricing and import‑export of diamonds for the front companies. He was accused of making false statements to regulators during the investigation and of being intimately involved in the circular trading scheme. Yet instead of facing consequences, he was later promoted to executive director of Adani Australia, overseeing the Carmichael Mine and rail projects.

Another family member, Vinod Adani (also known as Vinod Shantilal Shah), has been linked by media reports to networks of offshore shell companies allegedly used by the group to facilitate transactions. Although the Adani Group has claimed that Vinod has no role in its companies beyond being a shareholder, corporate documents show that he held executive roles in several Adani companies until at least 2011. Investigative journalists say he controls dozens of shell entities in Mauritius, Cyprus, Singapore and Caribbean islands that channel billions of dollars into Adani companies. The complexity of these structures raises questions about whether they serve legitimate business purposes or help obscure related‑party transactions.

The 2010 Customs Duty Evasion Case

One of the few widely reported criminal cases against an Adani executive involved the 2010 arrest of Rajesh Adani in a duty‑evasion scam. A report reproduced by Karmayog.org provides a rare public account of the case. According to the report, the CBI’s Anti‑Corruption Bureau in Goa arrested two customs and central excise officers in connection with a scam that also saw the arrest of Adani Group managing director Rajesh Adani.

The officers were alleged to have conspired with Adani to evade excise duties on naphtha and furnace oil consignments stored in Goa after licences had expired. The scam, which took place around 2006–07, was estimated at ₹107 million. Rajesh Adani was arrested in Gujarat and granted bail before being taken to Goa on transit remand.

This case exemplifies how regulatory action has frequently been followed by quick bail and protracted litigation. There is little public record of the final outcome, only that the charges did not impede Rajesh Adani’s rise within the conglomerate. A pattern emerges where allegations surface, some arrests are made, bail is obtained, and then the issue fades without clear resolution. Meanwhile, key executives continue to ascend within the group.

How could you forget the “Hindenburg’s 2023 Report and Stock‑Manipulation Allegations”…

In January 2023 Hindenburg Research, a U.S. short‑selling firm, published a 100‑page report titled “Adani Group: How the World’s 3rd Richest Man is Pulling the Largest Con in Corporate History.” The report alleged that the Adani Group engaged in years‑long stock manipulation, accounting fraud and money laundering through a network of offshore shell companies.

It claimed that family members and associates used shell entities in Mauritius, the UAE and Caribbean islands to inflate the value of publicly traded Adani companies and siphon money from them. Hindenburg also noted that many of the largest “public” holders of Adani stock were actually offshore funds with little diversification, raising questions about whether they were acting as nominee fronts to skirt Indian regulations requiring minimum public shareholding.

Allegations of Manipulated Shareholding Structures

Hindenburg identified dozens of Mauritius‑based funds tied to Vinod Adani and close associates that collectively held billions of dollars in Adani shares. These funds had minimal other investments, suggesting their primary purpose was to hold Adani stock. Indian rules require listed companies to maintain at least a 25 percent public float and to disclose any promoter holdings, but the report alleged that Adani used offshore funds to conceal the true level of promoter control. Hindenburg’s researchers filed Right to Information (RTI) requests with the Securities and Exchange Board of India (SEBI) and discovered that the regulator was investigating the offshore funds more than a year before the report was published.

The report also highlighted emails showing that the CEO of an offshore fund called Elara had worked with a fugitive Indian stock manipulator, Dharmesh Doshi, after he evaded arrest. Another firm, Monterosa, controlled funds that were almost exclusively invested in Adani stocks. Hindenburg alleged that Vinod Adani’s daughter married the son of a fugitive diamond merchant who previously collaborated with Doshi and that this network of relationships further muddied the separation between the Adani Group and so‑called independent investors.

Adani’s Response and the Aftermath

The Adani Group denied the allegations, calling the report a “malicious combination of selective misinformation and stale, baseless and discredited allegations.” In response, SEBI launched a formal investigation into whether the group had violated securities laws. By September 2025 SEBI concluded two of the cases and dismissed the stock‑manipulation accusations. Al Jazeera reported that SEBI found no violation and that Gautam Adani described the Hindenburg report as “fraudulent and motivated,” claiming that it caused investors to lose money. However, SEBI acknowledged that it still had more than a dozen pending allegations related to breaches of securities norms. Thus, while the regulator cleared two cases, many questions remain unresolved.

The dismissal of some allegations does not vindicate the group; rather, it highlights the narrow scope of SEBI’s conclusions. The regulator’s investigation did not address the complicated network of offshore entities described by Hindenburg. Meanwhile, the short‑seller’s report triggered a steep decline in Adani’s share prices, wiping out billions of dollars in market capitalization and prompting concerns among retail investors. The Indian government responded by accusing the report of being an attack on national pride, further politicizing the issue.

The Hindenburg saga underscores how difficult it is to hold powerful conglomerates accountable. A foreign research firm triggered more transparency than domestic regulators had managed in years. Indian authorities responded defensively, defending “national interests” rather than probing the substantive issues. By declaring aspects of the report baseless while acknowledging ongoing investigations, SEBI created confusion where investors are left wondering whether the group’s finances are sound, and critics see regulatory capture.

U.S. Bribery Indictment and International Repercussions

In November 2024 U.S. federal prosecutors in the Eastern District of New York unsealed a five‑count indictment against Gautam Adani, his nephew Sagar Adani and Vneet Jaain (an executive in an Adani renewable‑energy company), alleging that they conspired to bribe Indian state officials to win lucrative solar‑energy contracts. Prosecutors alleged that Adani and his co‑defendants promised to pay more than US$250 million in bribes to secure contracts worth billions, then concealed the scheme while raising money from U.S. investors. According to U.S. Attorney Breon Peace, the defendants orchestrated an elaborate plan to bribe officials and hide evidence.

Key details of the indictment include:

Scope of Bribery: The alleged scheme involved paying or promising hundreds of millions of dollars in bribes to state government officials in India to induce them to award solar power contracts to Adani Green Energy Ltd and to another company, Azure Power Global Ltd. U.S. authorities claimed that the bribes were intended to ensure that the Solar Energy Corporation of India (SECI), a state‑run entity, would enter contracts favourable to Adani and its partner.

Obstruction of Justice: Four of the eight defendants were charged with conspiring to obstruct justice by deleting electronic evidence and lying to the U.S. Department of Justice, Securities and Exchange Commission (SEC) and FBI.

SEC Civil Lawsuit: The SEC filed a parallel civil lawsuit alleging that Adani executives falsely claimed to investors that Adani Green had strong anti‑corruption measures while secretly arranging bribes. The regulator said the defendants misled investors about the integrity of their operations, thereby violating U.S. securities laws.

Extradition Challenges: Although the U.S. and India have an extradition treaty, analysts expect India to resist extraditing its citizens. The case could take years to resolve.

Adani Group’s spokesperson said the company would fight the charges. Indian media speculated that the indictment was part of a broader U.S. crackdown on corruption in international business. Regardless of the outcome, the case exposes Adani to legal risks outside India and could deter foreign investors. It also suggests that U.S. regulators are willing to pursue alleged corruption involving foreign officials when American investors are misled.

Patterns of Government Response: Leniency, Delay and Denial

Across the myriad allegations, tax evasion, over‑invoicing, customs duty fraud, stock manipulation and bribery, one theme recurs where a perception that Indian authorities are either reluctant or unable to act decisively against the Adani Group. While the DRI and other agencies have sometimes initiated probes, these efforts often stall in courts or are quietly dropped. Meanwhile, the group continues to secure large public contracts and enjoys access to favourable financing from state‑run banks. Understanding this apparent leniency requires examining both the political context and institutional weaknesses.

Political Connections and Concentration of Power

The Adani Group’s ascent has coincided with the rise of Prime Minister Narendra Modi. Gautam Adani was seen flying with Modi on his personal aircraft during the 2014 election campaign, symbolizing a close relationship. Critics argue that the government’s policies on coal mining, power tariffs and infrastructure privatization have disproportionately benefitted Adani companies. Some see the conglomerate as almost a quasi‑state actor, undertaking national projects like port development and defence manufacturing. Such closeness may make regulators wary of taking actions that could embarrass the government or derail large infrastructure projects.

Opponents also note that the Adani Group’s generous political donations through electoral bonds (now declared unconstitutional by India’s Supreme Court) may foster a sense of indebtedness among policymakers. Transparency advocates have called for a forensic audit of how many bonds were purchased by Adani or by shell companies linked to the group. Without such data, suspicions linger that corporate contributions translate into regulatory indulgence.

Institutional Challenges: Limited Capacity and Legal Hurdles

Regulatory agencies such as the DRI and SEBI face structural obstacles when pursuing large conglomerates. They often lack resources to analyze complex offshore transactions. When they do attempt to collect evidence, companies can challenge requests in courts, as Adani did when the DRI sought documents from foreign jurisdictions. India’s judicial system is overburdened, resulting in prolonged litigation that erodes the deterrent effect of any investigation. Meanwhile, the accused companies continue business as usual, raising capital and securing new contracts.

Another problem is the fragmentation of regulatory responsibilities. Customs fraud involves the DRI and the customs department; stock‑market manipulation is under SEBI; environmental issues fall under the Ministry of Environment; and bribery can trigger investigations by the Central Bureau of Investigation (CBI) or Enforcement Directorate (ED). Without a coordinated mechanism, investigations remain siloed, allowing companies to exploit gaps. For example, when Hindenburg’s report alleged stock manipulation, SEBI launched an investigation but limited it to two cases and quickly dismissed them. The regulator did not explain whether it examined the alleged offshore funds or cross‑checked them with anti‑money‑laundering agencies.

The Adani Group and some government officials have framed criticism of the conglomerate as an attack on India itself. In response to the Hindenburg report, the group issued an advertisement claiming it was being targeted by forces intent on derailing India’s growth. Politicians from the ruling Bharatiya Janata Party (BJP) echoed the sentiment, accusing critics of “insulting India.” This nationalist rhetoric deflects questions about corporate governance and instead appeals to patriotism. It also intimidates regulators by equating scrutiny of a private company with anti‑national activity.

Such messaging resonates in a country striving to become a global economic power. Many Indians take pride in homegrown billionaires challenging multinational giants. However, conflating a company’s fortunes with the nation’s can create blind spots. It discourages robust oversight and fosters a culture of impunity in which powerful business houses become “too big to regulate.”

The allegations against the Adani Group are not merely corporate scandals; they have tangible impacts on ordinary Indians.

Higher Electricity Costs and Pollution

When imported coal and power equipment are over‑invoiced, the inflated costs are passed on to consumers through higher tariffs. OCCRP’s investigation documented shipments where Adani sold coal to a state utility for triple the purchase price[9]. The Tamil Nadu NGO Arappor Iyakkam estimated that the state’s power company overpaid about ₹6,000 crore (US$720 million) for coal between 2012 and 2016, with nearly half the tenders awarded to Adani. If these numbers are accurate, millions of households and small businesses effectively subsidized private profit. Moreover, burning lower‑quality coal to meet energy needs increases air pollution, which caused an estimated 1.6 million deaths in India in 2019. Over‑invoicing thus has both economic and health costs.

Burden on Taxpayers

Customs duty evasion deprives the government of revenue that could be spent on public services. The DRI’s allegation that Adani Defence evaded ₹770 million in import duties is modest compared with the billions involved in the coal case, but it illustrates how misclassification can become systemic. If large conglomerates consistently underpay duties while ordinary citizens face strict enforcement, public trust in tax compliance erodes.

Undermining Market Integrity

Allegations of stock manipulation and opaque shareholding structures harm the credibility of India’s capital markets. When a small number of offshore funds hold huge positions in a company while claiming to be “public investors,” other investors cannot accurately assess market risks. The Hindenburg report argued that four Adani companies were near the delisting threshold because promoter ownership (including disguised ownership through offshore funds) was so high. If such practices are left unchecked, they could deter foreign investment or prompt regulators to tighten rules that affect all companies, not just Adani.

International Reputation

The U.S. bribery indictment shows that Indian companies are not insulated from foreign laws. When foreign courts allege corruption in obtaining Indian state contracts, it tarnishes India’s image as a destination for ethical business. Investors may fear that doing business in India entails paying bribes or competing against politically connected firms. Unless Indian authorities respond transparently and prosecute wrongdoing, such perceptions could deter investment.

Why Regulatory Lethargy Persists?

Despite repeated allegations and evidence, the Adani Group continues to expand. Many wonder why regulators and courts have not decisively resolved the cases. Several factors may explain the inertia:

Concentration of Economic Power: Adani’s dominance in critical sectors, ports, coal, energy, airports, gives the group leverage. Cracking down on such a conglomerate could disrupt essential services or undermine infrastructure projects, making officials cautious.

Political Patronage: Close ties to political leaders can shape regulatory priorities. In a system where corporate donations and lobbying are opaque, the risk of regulatory capture is high. Opposition politicians have alleged that Adani benefits from preferential treatment, but proving quid pro quo is difficult.

Judicial Backlogs: India’s courts are overwhelmed. Even when agencies file cases, they can take years to reach verdicts. This delay weakens deterrence and allows accused parties to continue operations while cases drag on.

Complex Corporate Structures: Investigating transnational corporate networks requires cooperation from foreign jurisdictions. Offshore secrecy laws make it hard to trace beneficial ownership. Agencies like the DRI may lack resources or political backing to pursue such complex probes vigorously.

Public Apathy and Media Capture: Portions of Indian media depend on advertising revenue from large corporations. Critical coverage can risk losing advertisers. When mainstream outlets underplay controversies, public pressure diminishes. Social media may circulate allegations, but without sustained investigative journalism, regulatory momentum wanes.

At the end, Is Adani Milking India?

The evidence reviewed in this article paints a troubling picture. From customs duty evasion on missile parts to the over‑invoicing of coal imports, from a 2010 duty evasion scam involving naphtha to the alleged diamond trading scheme that promoted family members despite investigators’ suspicions, the Adani Group has faced a litany of serious allegations. A U.S. indictment accusing Gautam Adani and associates of orchestrating a massive bribery scheme further underscores that the scrutiny is not confined to Indian borders.

It is important to acknowledge that not all allegations have been proven. SEBI recently dismissed two cases of stock‑manipulation. Adani Group’s spokespeople have consistently denied wrongdoing and described various reports as politically motivated. Courts have, at times, ruled in the company’s favour. Nonetheless, the cumulative weight of investigations suggests that the group operates in grey areas at best and may have engaged in outright malfeasance at worst.

If one views these episodes collectively, a pattern emerges where a powerful conglomerate uses complex corporate structures, political connections and legal resources to maximize profits, sometimes by manipulating regulations and public resources. A common man bear the costs through higher tariffs, lost tax revenue and compromised environmental and labour standards. Meanwhile, regulators appear hesitant or incapable of enforcing accountability, creating a perception of impunity.

The question “Is Adani doing tax erosion?” can therefore be reframed. It is less about a single instance of tax evasion and more about a broader system that allows wealth extraction through legal loopholes, regulatory capture and opaque governance. Whether or not the Adani Group ultimately proves its innocence in specific cases, the need for robust, transparent and independent oversight cannot be overstated. India’s democracy and economy depend on it.