Gautam Adani is a hard man to avoid in India. Whether it’s electricity, ports, power plants, coalmines, airports, cement, solar panels, apples, edible oils, storage of data or grains or even a television news channel, the colossal empire of India’s most powerful billionaire has reached into almost every corner of Indian life.
According to Adani, his staggering rise from a nondescript diamond merchant in Gujarat to Asia’s richest man – whose wealth at one stage surpassed Jeff Bezos – and with whom much of India’s future development has been entrusted, is due only to “hard work, hard work, hard work”. His own successes, he has said, are the successes of the “India growth story”.
Yet, as many have pointed out, Adani’s meteoric rise has mirrored that of another powerful man from Gujarat: Narendra Modi, who has been prime minister since 2014. In the past five years, the Adani Group, a sprawling conglomerate of companies, rose in value by 2,500%, with a private sector monopoly on everything from electricity to coal, and Adani’s net worth touched $127bn. That was, until two weeks ago.
It was a bombshell report by a US-based investment research firm Hindenburg that that has brought much of the Adani empire crashing down to earth. In a highly detailed document that took two years to research, Hindenburg said Adani was pulling off the “largest corporate con in history” through stock manipulation, eye-watering levels of debt and secret offshore accounts.
The Adani Group hit back, denying all the allegations as baseless in a response that stretched to 413 pages. It said the report was an “attack on India itself” and that its debt levels conformed to industry standards.
The impact continues to reverberate through the domestic and international markets. The Adani Group has lost over $100bn in market value, been forced to cancel a major share offering and its stocks continue to fall, while Adani himself dropped off list of the world’s top 20 richest men. But given the well-documented close relationship between Adani and the Modi, who has himself been dogged by allegations of indulging in crony capitalism, the repercussions have also reached into the political sphere.
Modi has been silent on all questions about his ties to Adani. Attempts by the opposition parties to get the matter debated in parliament have been shut down, causing the parliament session to be suspended for two days. Over 200 members of the opposition Congress party were arrested for holding protests outside offices which has stakes in the conglomerate.
After Congress party leader Rahul Gandhi stood up in parliament with photos of Modi and Adani on a plane together and accused the government of giving Adani preferential treatment, all of his remarks were ordered to be expunged from parliamentary record.
Speaking on Tuesday, home minister Amit Shah said the government had “nothing to hide or be afraid of” on the controversy over Adani Group.
A shared vision, a shared rise
The relationship between Modi and Adani dates back more than two decades to 2002. As chief minister of Gujarat, Modi’s close links with big industrialists like Adani helped him reinvent himself as the pro-business face of modern economic progress, while Adani was granted highly beneficial concessions on tax and regulation in the state that allowed his wealth and stature to grow exponentially.
“Adani’s astounding, debt-fuelled rise mixed entrepreneurial dynamism, extravagant risk taking and canny political connections,” said James Crabtree, author of The Billionaire Raj.
After Modi won the 2014 general election, he flew back to Delhi on Adani’s plane, captured in a now iconic photo of him in front of the Adani logo. Adani also became a regular companion on Modi’s international trips, sometimes officially as part of a business delegation but other times unofficially, and, according to a 2015 report, was present during Modi’s visits to the United States, Australia, Brazil, Japan, France and Canada.
Adani has repeatedly denied that his longstanding connection with the prime minister has led to preferential treatment, as has the Indian government. Yet it has been evident that much of Modi’s vision for the development of India, particularly his infrastructure and energy ambitions, have been placed in the hands of the Adani Group, even as accusations of fraud, tax evasion, over-valuation and heavy debt swirled for years. The industrialist’s personal wealth went from $2.8bn in 2014 to $127bn by the end of 2022.
Over the past decade, the Adani Group won an endlessly expanding list of nationally significant projects. It now owns a string of strategic ports along India’s coast that handle about 30% of all India’s international freight and been able to acquire some of India’s most valuable tracts of land, be it Dharavi slum in Mumbai for redevelopment or the ancient Hasdeo Arand forest in Chhattisgarh for coal mining. Many of their projects face ongoing protests for causing environmental devastation or displacing communities.
Modi stands accused of helping Adani secure lucrative deals for coal and renewable energy projects in neighbouring Sri Lanka and Bangladesh. India’s ongoing commitment to coal has also been linked to the Adani group’s mammoth investment in India’s coal sector. “It’s interesting how the bigger Adani got in coal mining in India, the less momentum towards decarbonisation the Indian government seemed to be pursuing,” said Tim Buckley, a Sydney-based energy finance consultant.
The powerful connections wielded by the Adani Group have also appear to enable them to get projects done quicker than most, often sidestepping the entangled bureaucratic systems and regulations of India. On more than one occasion, legislation and regulations were amended or weakened to allow Adani to enter into new sectors or gain a significant tax advantage, including rules being changed so he could take ownership of six airports, India’s second busiest in Mumbai among them. The group denied any wrongdoing.
The activities of the group also became notoriously difficult to scrutinise, with journalists and news companies who reported critically on Adani slapped with lawsuits. After Adani recently pulled off a stealth take-over of India’s popular TV news channel NDTV, which had been seen as one of the last remaining bastions of mainstream independent journalism, the space for critical reporting on the Adani empire appeared to shrink further.
Paranjoy Guha Thakurta, one of the few journalists who produced critical reports on the Adani businesses, is currently subject to six defamation suits brought by the Adani Group and a gag order from the court. “No one else has built a corporate empire so vast, sprawling, diversified and dominant in so many sectors of the Indian economy than Mr Adani,” said Thakurta, who said he felt “vindicated” after the Hindenburg report.
What next for India?
With around 10% of India’s future infrastructure projects in the hands of the Adani Group, as well as a promised $100bn investment in India’s green energy sector in India, there is concern that India’s development could falter if the fortunes of the Adani Group worsen and it is unable to raise capital. The Adani group has insisted “all ongoing projects will continue according to plan”.
“If the bubble hasn’t already burst it has at least halved in size,” said Geoff Law, who runs Adani Watch, a website funded by an Australian non-profit that has reported on the Adani Group’s actions in Australia and India.
“It is inevitable that their more ambitious projects will be re-examined and authorities and corporations will have second thoughts about the ventures that they’ve entered into with Adani.”
This week, the country’s market regulator, Securities and Exchange Board of India, said it was “inquiring” into the allegations made in the Hindenburg report, while the government told the supreme court it had no objection to an expert committee looking into the impact on Indian investors.
Nonetheless, Crabtree was among those who were doubtful that Adani would be brought down entirely by the Hindenburg report, given the powerful political actors vested in his conglomerate.
“But it does suggest that a corporate growth model that combines heavy debt, complex financing and opaque governance might not be in India’s long-term interest,” he said.
