It’s been more than a week since the US Department of Justice, FBI and the Securities and Exchange Commission issued indictments- charging the Adani group, its top leadership including Gautam Adani of a conspiracy to bribe Indian government officials for contracts, and defrauding US investors by raising capital through bonds issues.

Remember these are indictments – they still need to go through a trial process, and only if there’s a conviction will the case itself go forward – there’s also the possibility of Adani paying fines and settling the case.

The Adani group has denied the charges – 5 counts in all naming various Adani group officials in India and the US and will take legal recourse. The links to these are below, and you can also see explainers at www.thehindu.com

Department of justice

US Securities and Exchange Commission

What is the impact of the Adani indictment on India-US ties?

To begin with, the Government’s response has been silence- with the explanation that this is a private company, and not connected with the government.

Remember, last year, the MEA had not responded to a series of allegations against the Adani group by US short-seller and market research company Hindenberg Research either. An Adani group official had alleged a conspiracy to defame India, even standing in front of the However, this time it is the FBI, the Department of Justice and the Securities and Exchange Commission making the allegations, which requires a response at a more official level.

Along with the FBI and DoJ’s investigation into the Pannun assassination plot case- the timing of the indictments into Adani appear to have political significance- given that the new Trump administration will come into place January 20th and will change most of the top prosecuting officials in both cases.

There is also the question of US double standards and overreach- given the indictment is for alleged bribes paid in India to Indian officials.

With warm personal ties with PM Modi and a planned visit by the US President to India for the Quad summit next year the government will likely not worry about the impact of other aspects of bilateral ties.

However, the company itself will not be able to raise funds in the US, nor will it have recourse to US government grants like the DFC loan for Colombo port in the foreseeable future, and this may impact India-US projects in the following areas:

Routing of funds for climate change transition from the US- given the Adani group’s dominance of solar power projects

Cooperation for High-Tech and Defence deals which may involve the group

Infrastructure projects in other countries where India, US are cooperating

What is the impact of the indictment on ties with other countries?

The first impact was seen in Kenya, where President Ruto cancelled contracts for an energy plant and airport project with the Adanis

In Sri Lanka the government announced it has a review by the ministry of Finance and Foreign Affairs looking into the Adani projects for a terminal at Colombo port, and wind energy. In responses to The Hindu, the US DFC said it is assessing the situation and hasn’t disbursed the $553 million project it promised a year ago.

In Bangladesh, after the courts ordered an enquiry, the government set up a panel to look into charges of overcharging and corruption into the Adani power agreement to supply power from a plant in Godda, Jharkhand.

In France, energy major Total said it was holding any further investment into an LNG venture with Adani.

Governments in countries like Tanzania where Adani is developing a container terminal, and Israel where Adani ports runs a terminal in Haifa port, have said they will continue with the projects however.

Remember Indian economic operations have already been affected by Geopolitics.

– Russia’s war in Ukraine has meant Sanctions against about 30 Indian companies

– Israel’s war in Gaza has affected IMEEC and I2U2

– Iran-US tensions have meant India lost a major supplier of oil due to sanctions. Also Venezuelan oil

– Sanctions on Myanmar have stopped infra projects

– Government Changes in Maldives Bangladesh and Sri Lanka have put Indian projects under the scanner

What does this mean for India’s investment diplomacy and image?

US charges will cause reputational damage when it comes to integrated and allied economy in North America and Europe.

Adani investments and projects have been closely aligned with Modi government’s foreign policy forays and priorities in infrastructure development and energy- both thermal and green power –- with projects in Nepal, Bhutan, Bangladesh, Sri Lanka, Myanmar, Kazakhstan and discussions with Indonesia, Vietnam and Greece, following shortly on high-level meetings with PM Modi- therefore it is harder to distance from the fallout of the US indictments.

If the trial proceeds in the US it puts a cloud over India’s own legal and regulatory mechanisms on dealing with corruption internally, and will raise questions about what steps the government is taking.

While these cases are about alleged corruption and coercion inside India, other states, especially where governments have changed may open enquiries into the nature of projects done by Indian companies with their predecessors.

WorldView Take:

For years, India’s foreign policy has been fuelled by its economic progress and the capacity of Indian companies to carry out international projects. It is futile to assume that charges brought against a major Indian company by a major global power will have no impact on India’s image or global economic policies. While there is no question, the US’s actions indicate a considerable overreach, they fall within American laws- and India cannot expect MNCs to operate according to Indian laws here, while not ensuring Indian companies do the same abroad.

Reading Recommendations:

 India’s Moment : Changing Power Equations around the World by Mohan Kumar
Gautam Adani: Reimagining Business in India and the World by R.N. Bhaskar

The End of the Chinese Century? How Xi Jinping Lost the Belt and Road Initiative by Bertil Lintner

The Great Tech Game: Shaping Geopolitics and the Destiny of Nations by Anirudh Suri

India’s Development Diplomacy: Understanding Development Cooperation As A Tool For Strategic Engagement In South Asia by Urmi Tat

India’s Trade Policy: Arvind Panagariya

Presentation and script: Suhasini Haidar

Editing: Kanishkaa Balachandran, Sabika Syed