India probes Adani Defence for tax evasion on missile parts imports, sources say

NEW DELHI: Indian authorities are investigating Adani Enterprises’ defence unit for evading import taxes on components used to make missiles, two government sources with direct knowledge said, marking the newest regulatory scrutiny of the group.

Adani Defence Systems and Technologies is one of the smaller businesses of the coal-to-airports conglomerate of billionaire Gautam Adani. It makes defence equipment like missiles, drones and small arms, mostly for Indian security forces.

India’s Directorate of Revenue Intelligence started investigating Adani Defence in March for evading tariffs of 770 million rupees ($9 million) in importing some missile components by wrongly claiming that they were exempt from customs duties and tax, according to the two government sources and a document detailing the case that was reviewed by Reuters.

In a statement, Adani Group said the directorate had “sought clarifications” on its imports based on their interpretation of the customs rules and the “clarifications have been provided with supporting documents.”

“The issue stands closed from our end,” an Adani spokesperson added, without elaborating or explaining if the company made any payments to settle the matter.

The alleged amount of tax evaded - $9 million - is significant given it is more than 10% of Adani Defence’s 2024-25 revenue of $76 million, and more than half its profit.

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One of the government sources said Adani executives during the investigation admitted to misclassification of the parts it imported, but did not elaborate. Adani did not comment on Reuters questions regarding the source’s assertion.

Typically in such cases, companies are liable to pay the alleged duty evaded with a 100% penalty, which would total to $18 million in this case.

The investigation has not been previously reported.

Investigation related to short-range missile parts

India’s markets regulator recently cleared the Adani Group of two cases of alleged stock manipulation, but it still faces more than a dozen allegations related to breaches of securities norms.

In addition, the revenue agency has been investigating the Adani Group since 2014 for over-invoicing certain coal imports. Adani has denied wrongdoing and mounted legal challenges to block the investigation, Reuters has previously reported.

The first government source said the defence investigation related to parts imported for making short-range surface-to-air missile systems and attracted a 10% import tax and an 18% local tax. But the company misclassified them as parts of long-range missiles that were exempt from tariffs.

The Adani Group referred Reuters to a September 2025 Indian government rule change that has since allowed any missile parts to be imported without any tariffs. The earlier rules did not allow such exemptions for short-range missile parts, said the government source.

Adani imports from Russia, Israel

The directorate has in recent months warned Samsung and Volkswagen for similar import tariff misclassifications. The two companies are contesting the demands.

In August, Gautam Adani said his company’s drones were used by the Indian military during the May conflict with Pakistan in which both sides used jets and missiles.

The first government source added the imported components at the centre of investigation were non-explosive parts and accessories used in the manufacture of short-range missiles and their launching mechanism.

Adani Defence has imported sets of non-explosive missile parts and accessories from Russia worth $32 million since last year, commercially available customs records show. The sources did not say which exact shipment is under investigation.

Overall, Adani has imported $70 million worth of defence parts from countries such as Russia, Israel and Canada since January 2024.