Adani Defence Under the Scanner: ₹770 Crore Import Duty Evasion Probe
Indian authorities have launched a detailed investigation into Adani Defence Systems and Technologies Ltd., a subsidiary of billionaire Gautam Adani’s sprawling conglomerate, for allegedly evading ₹770 crore (about $9 million) in import duties on components used to manufacture missile systems. The Directorate of Revenue Intelligence (DRI) began the probe in March 2025 amid suspicions that the company misclassified short-range missile parts as long-range components to dodge paying import taxes and local GST.
The Allegation and Investigation Focus
The primary allegation is that Adani Defence imported non-lethal components essential for short-range surface-to-air missile systems but declared them under tariff exemptions applicable only to long-range missile parts. This misclassification allowed the company to avoid paying a 10% basic customs duty plus an 18% integrated goods and services tax (IGST). Sources indicate that these parts include structural fittings, mounting assemblies, and control interfaces, imported mainly from Russia, Israel, and Canada since January 2024, totaling $70 million in defence imports.
Executives from Adani Defence reportedly admitted to this misclassification during questioning by the DRI, acknowledging errors in their import documentation. The amount allegedly evaded represents over 10% of Adani Defence’s revenue for fiscal year 2024-25, which was around $76 million, and accounts for more than half of the subsidiary’s profit, underscoring the financial significance of the case.
Context Within Broader Regulatory Pressures
This investigation comes amid intense scrutiny facing the broader Adani Group, which operates in diversified sectors including energy, ports, airports, and defence manufacturing. The conglomerate faces at least a dozen regulatory probes, including longstanding investigations into coal import over-invoicing since 2014 and securities-related allegations involving stock price manipulation, though some have recently been cleared by India’s Securities and Exchange Board (SEBI).
Additionally, Gautam Adani personally faces serious legal challenges abroad, including US federal charges filed in late 2024 alleging a $265 million bribery scheme to secure solar energy contracts, which adds international dimension to regulatory pressures on the group.
Consequences and Potential Impact
If substantiated, the alleged duty evasion could lead to significant penalties, including payment of the unpaid customs duties plus a 100% fine, which could amount to fines up to $18 million. Such penalties would be a sizable hit given the subsidiary’s size and profitability. This case could also result in increased regulatory scrutiny on Adani Defence operations and imports, potentially slowing business and disrupting their ambition to expand India's indigenous defence manufacturing capabilities that align with India’s Atmanirbhar Bharat (self-reliance) goals.
Investor confidence might be affected by this probe, as it adds to the conglomerate’s mounting legal and regulatory challenges, despite recent market regulator clearances on unrelated matters. The case also raises questions about compliance and governance in sensitive sectors such as defence, where transparency and adherence to regulations are critical.
Adani Group’s Reaction
The Adani Group has stated that it has complied with all regulations and provided clarifications and supporting documents to the DRI based on their interpretation of customs rules. The company claims the issue is closed from their side, though the investigation remains ongoing.
This probe into Adani Defence’s import duty practices underscores the evolving regulatory environment in India's strategic sectors and highlights the challenges faced by one of the country's most influential conglomerates. The outcome of this investigation could shape future regulatory oversight of defence manufacturing imports and impact the Adani Group’s business operations and reputation.