It is one of the earliest lessons parents teach young children: do not put all your eggs in one basket. Investment advisers offer a similar mantra: diversify your portfolio. Yet, these are dictums that India’s policymakers in the strategic sphere appear to have ignored or forgotten — a mistake that could come to haunt New Delhi after last week’s indictment of the industrialist, Gautam Adani, and seven others by prosecutors in the United States of America.
The US department of justice and the Securities and Exchange Commission have accused Adani and alleged co-conspirators of bribing Indian officials with $250 million in all, across multiple states, to win contracts worth $2 billion. The Adani Group has vehemently denied the allegations, which came after serial reports by the US-based investment research firm, Hindenburg, accusing the Indian conglomerate of dubious business practices, including money laundering. The Adani Group has denied those charges too.
Unsurprisingly, much of the storm over the allegations has centred on potential political implications. Parliament sessions have been suspended over the Opposition’s demand for an independent inquiry into the accusations against Adani. Rahul Gandhi, the de facto face of India’s Opposition, has accused the prime minister, Narendra Modi — who is known to have enjoyed a decades-long relationship with the industrialist — of shielding Adani.
The Modi government and its supporters have pointed out that all the Indian states where, according to the US indictment, Adani paid bribes were ruled by Opposition parties, not the Bharatiya Janata Party. They have also asked why, if Adani is so tainted, do Congress governments do business with him?
Amidst all this, Indian diplomacy and its ambitions have taken a hit. Soon after the indictment was made public, the Kenyan president, William Ruto, announced that his government had scrapped a procurement process that had been expected to award control of Nairobi’s airport to the Adani Group. He announced that Kenya was also cancelling a separate 30-year deal worth more than $700 million with an Adani firm to build power transmission lines. Sri Lanka announced that it is reviewing an Adani port project in Colombo. The French oil giant, Total Energies, has suspended any additional investment in the Adani Group until the allegations are cleared. And Bangladesh’s interim government has also decided to review power deals with the Adani Group.
These aren’t just setbacks for Adani — they are blows for India too. But it needn’t have been this way.
In recent years, India has tried to dramatically expand its development assistance to emerging economies, from South Asia to Africa to the Pacific Islands, with infrastructure projects being important pillars of this effort. A major factor driving these initiatives is a desire to compete with China, which has also invested heavily in countries around the world but has faced criticism for leaving them in deep debt. India’s pitch has been that unlike China, the projects it builds are sustainable, developed collaboratively with host nations and transparent.
But a disproportionate number of those projects has gone to the Adani Group, which has focused its energies on global expansion — including ports or container terminals in Israel, Tanzania and Myanmar. Critics have long questioned whether these projects were secured fair and square. Either way, Indian foreign policy planners have ended up relying far too heavily on one industrialist to project India’s overseas infrastructure-development power.
If Adani faces deeper troubles in the months ahead, many projects that are central to India’s strategic interests will, at the very least, get delayed. Such a scenario would, in turn, cast a shadow over India’s ability to match China’s capabilities as a provider of modern infrastructure to developing countries that need ports, highways, power facilities and airports at scale — and fast. Whatever happens with Adani, it is vital that India learns the right lesson: the country’s reputation as a reliable infrastructure partner must not hinge on the fortunes of one company.