Just days after congratulating U.S. President-elect Donald Trump on X, formerly Twitter, and promising an investment of $10 billion in “US energy security and resilient infrastructure projects,” Gautam Adani, chairman of the Adani Group and India’s second richest person, and seven of his associates were indicted by the U.S. Department of Justice on charges of bribery linked to a mega solar power plant.
According to the allegations, which relate to violations of the Foreign Corrupt Practices Act, members of the Adani Group promised bribes to the tune of $265 million to Indian government officials to secure energy contracts funded by international investors, including some from the United States. While the Adani Group has denied these claims, describing them as “baseless,” the U.S. Securities and Exchange Commission has already initiated a formal civil lawsuit against Adani and his associates.
When asked about the potential impact the indictment could have on India-U.S. relations, the White House reiterated that bilateral ties “stand on an extremely strong foundation” and said that both sides will “continue to navigate this issue.”
Meanwhile, when a journalist raised the issue at a recent special briefing by the Indian Ministry of External Affairs (MEA) on Prime Minister Narendra Modi’s visit to Guyana, it was promptly dismissed on grounds of not relating to the agenda. This follows a pattern where the Modi government has consistently avoided answering questions on its ties with the billionaire businessman. On the Adani allegations, a spokesperson for the BJP told reporters that the company should “give clarification and defend itself,” while assuring that “law will take its course.”
The Adani indictment comes close on the heels of charges by the United States Department of Justice (DOJ) against a former Indian intelligence official for allegedly orchestrating a foiled plot to murder Gurpatwant Singh Pannun, a pro-Khalistan U.S. citizen of Sikh origin, in New York. While both sides are working together to investigate the case, the United States is increasing pressure for “meaningful accountability” from the Indian side.
Recently, India and the U.S. concluded a $3.5 billion deal for 31 MQ-9B drones. The clearance of the sale by the U.S. Senate Foreign Relations Committee was contingent on the Modi government’s full “cooperation” with the DOJ in the Pannun case. This reflects growing concerns about the rise of illiberalism in India, which many in India perceive as hypocrisy and reflective of the West’s double standards, indicating some rifts in an otherwise “very invaluable relationship.”
Many analysts see the parallel rise of the Adani Group with the Modi government’s rise to power as more than a mere coincidence, but indicative of the close nexus between the two. The Modi government’s favoritism toward the Adani Group is an open secret among observers of Indian politics, and has garnered international media attention, especially since the publication of the Hindenburg Research report accusing the Adani Group of engaging in stock manipulation and accounting fraud based on a two-year long investigation in January last year.
So far, Modi has stayed silent on his alleged ties to Adani and the BJP has successfully derailed attempts by opposition parties to bring this up in parliamentary debates. However, the seriousness of the charges together with greater opposition unity indicates that Modi’s ties to Adani will face greater scrutiny both domestically and internationally.
Going by the experience of Donald Trump’s first presidency, India’s seemingly democratic backsliding is unlikely to cause major rifts. Unlike the Biden administration, which attached a lot of importance to liberal democracy, and hence could not openly ignore the undemocratic trends in India, as it would invite costly criticism, Trump’s disinterest in democratic and human rights will mean a more transactional, issue-based cooperation with India.
New Delhi can hope that, under the Trump administration, the Adani probe will not delve into the uncomfortable question of ties with the ruling BJP government. Although Trump won’t handle foreign policy entirely on his own, he will still wield significant discretionary power in this area, which under current circumstances is likely to benefit rather than harm India.
The immediate fallout is likely to be felt in countries like Sri Lanka, where the U.S. International Development Finance Corporation has committed to funding the Adani Group’s Colombo Port West Terminal Project. While a lot depends on how the legal proceedings unfold, irrespective of the verdict, the project will surely come under greater scrutiny, from both Washington and Colombo.
Even if the Adani Group reaches a settlement, the reputational damage caused by this indictment has far-reaching consequences. With some global banks already considering halting fresh credit to the Adani Group, it could potentially impair the conglomerate’s funding access. Given New Delhi’s growing reliance on private companies to finance overseas infrastructure projects, this is a cause for concern.
As I explained in an earlier piece for The Diplomat, the lack of transparency around how private companies liaise with Indian authorities overseas complicates matters. The Adani indictment may not immediately derail relations with the U.S., but if New Delhi fails to launch a domestic investigation, it will seriously damage its credibility as a reliable partner.