How the US fraud charges against him affect India’s economy and politics.

Just a few weeks ago, Gautam Adani, one of the richest men in the world, Donald Trump’s election victory was celebrated And announced plans to invest $10bn (£7.9bn) in energy and infrastructure projects in the US.

Now, the 62-year-old Indian billionaire and close ally of Prime Minister Narendra Modi, whose sprawling $169bn empire spans ports and renewable energy, faces US fraud charges that could potentially spread at home and abroad. May jeopardize their ambitions.

Federal prosecutors have accused him of orchestrating one. 250 million dollar bribery scheme And hiding it to raise money in America. They allege that Mr. Adani and his executives paid bribes to Indian officials to secure contracts worth $2 billion in profits over 20 years. The Adani Group has denied the allegations, calling them “baseless”.

But it is already hurting the group and the Indian economy.

Adani Group firms lost $34bn in market value on Thursday, taking the combined market capitalization of its 10 companies to $147bn. Adani Green Energy, the firm at the center of the allegations, also said it would not proceed with a $600 million bond offering.

Then there are questions about the impact of the allegations on India’s business and politics.

India’s economy is deeply intertwined with the country’s leading infrastructure tycoon, Mr. Adani. It operates 13 ports (30% market share), seven airports (23% passenger traffic) and India’s second largest cement business (20% market share).

With six coal-fired power plants, Mr Adani is India’s largest private player in power. At the same time, it has pledged to invest $50bn in green hydrogen and operates an 8,000 km (4,970 mi) long natural gas pipeline. He is also building India’s longest expressway and redeveloping India’s largest slum. He employs more than 45,000 people, but his business affects millions across the country.

Mr. Adani’s global ambitions include coal mines in Indonesia and Australia, airports in Kenya and Morocco, and energy projects. The group is overseeing more than a billion dollars worth of infrastructure projects in Tanzania and Kenya.

Mr. Adani’s portfolio closely mirrors Modi’s policy priorities, beginning with infrastructure and more recently expanding into clean energy. He has thrived despite critics labeling his business empire crony capitalism, pointing to his close relationship with Modi, the chief minister of Gujarat – where they both hail from. are – and as Prime Minister of India. (Like any successful businessman, Mr. Adani has forged ties with many opposition leaders, investing in their states.)

“This [the bribery allegations] is big. Mr Adani and Modi have been inseparable for a long time. This is going to affect the political economy of India,” says Paranjoy Guha Thakurta, an Indian journalist who has written extensively on the business group.

The crisis comes even as Mr. Adani has spent nearly two years trying to rebuild his image after 2023 by American short-seller Hindenburg Research. Report accused his group of stock manipulation and fraud for decades. Although Mr. Adani denied the claims, the allegations triggered a sell-off in the market and Ongoing investigation By the market regulator of India, SEBI.

“Mr Adani is trying to restore his image, and to show that the allegations of fraud made earlier by the Hindenburg Group were not true, and that his company and its businesses are actually quite A number of new deals and investments have been made over the past year or so, and so this is just a physical blow to the billionaire who has suffered the potential loss of those previous charges. Did a great job of putting away is.” Michael Kugelman of the Wilson Center, an American think tank, told the BBC.

For now, raising capital at home may prove difficult for Mr. Adani’s cash-guzzling projects.

“The market reaction shows how serious it is,” Ambrish Baliga, an independent market analyst, told the BBC. “Adanis will still secure funding for its major projects, but with a delay.”

The latest allegations could also add to Mr Adani’s global expansion plans. It has already been challenged under a plan in Kenya and Bangladesh. Occupancy at an international airport And a Controversial energy deal. “This [bribery charges] deters US-linked international expansion projects,” Nirmalya Kumar, Lee Kong Chian professor at Singapore Management University, told the BBC.

What’s next? Politically, opposition leader Rahul Gandhi has surprisingly called for Mr Adani’s arrest and promised to shake up Parliament. “Bribery to government officials is not news in India, but the amounts reported are staggering. I suspect the US has the names of some of the intended recipients. There is a potential backlash for the letter. There is more to come,” believes Mr. Kumar.

Mr. Adani’s team will no doubt mount a top-notch legal defense. “Right now we just have the indictment, there’s a lot more to come,” says Mr. Kugelman.

Mr Kugelman says that although US-India trade relations may face scrutiny, particularly the recent US$500m deal with Mr Adani for a port project in Sri Lanka. Given, it is unlikely to be affected. Despite the serious allegations, the broader US-India business relationship remains strong.

“The US-India trade relationship is very large and multifaceted. Even with these serious allegations against someone who is a major player in the Indian economy, I don’t think we should overstate the impact on that relationship. should be offered,” says Mr. Kugelman.

Also, it is unclear whether Mr. Adani could be targeted despite the US-India extradition treaty, as it depends on whether the new administration allows the cases to proceed. Mr. Baliga believes that it is not doom and gloom for the Adanis. “I still think foreign investors and banks will support them as they did after Hindenburg, even though they are part of very important, well-performing sectors of the Indian economy,” he says. are

“There’s also a sense in the market that maybe this will go away and settle once and for all. [Donald] The Trump administration took over.”