Missile Deal Controversy: Govt Investigates Adani Defence for Tax Evasion, Say Sources

Adani Has Imported $70 Million Worth of Defence Parts from Countries Such as Russia, Israel and Canada Since January 2024

In a high-profile development, Adani Defence is under government scrutiny for suspected tax evasion linked to missile imports. 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. 

Sources reveal discrepancies in customs declarations have triggered a formal probe, with wider implications for India’s defence procurement practices.

The Allegations

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

One of the government sources said Adani executives during the investigation admitted to misclassification of the parts it imported, but did not elaborate. 

Another government source claimed at the centre of the investigation that the imported components were “non-explosive parts” and accessories used in the “manufacture of short-range missiles” and their “launching mechanism.”

However, the sources did not reveal which exact shipment is currently under scrutiny.

Did Adani Group Break Rules?

The first government source said the defence investigation related to parts imported for making short-range surface-to-air missile systems 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.

A change in the rule by the Indian Government in September 2025 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.

In recent months, the directorate has warned Samsung and Volkswagen for similar import tariff misclassifications.

Imports Worth $70 million 

Adani Defence has imported sets of non-explosive missile parts and accessories from Russia worth $32 million since 2024, as per commercially available customs records. Overall, Adani has imported $70 million worth of defence parts from countries such as Russia, Israel and Canada since January 2024.

Adani Group Issues Clarification

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.

About Adani Defence 

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. 

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.”

This is not the first time the Adani Group has come under the scrutiny of regulators. Recently, India's markets regulator 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. 

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