Indian authorities are probing Adani Enterprises’ defence arm for allegedly evading import duties on missile components, according to two government officials with direct knowledge of the matter.

The investigation, led by the Directorate of Revenue Intelligence (DRI), began in March and concerns potential tariff evasion amounting to approximately $9 million, reported Reuters.

The inquiry centres on Adani Defence Systems and Technologies, one of the businesses of billionaire Gautam Adani’s coal-to-airports conglomerate.

The company manufactures defence equipment such as drones, missiles, and small arms primarily for India’s security forces.

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

Officials alleged that the company misclassified short-range surface-to-air missile parts as components of long-range missile systems, which are exempt from import taxes.

The alleged misclassification allowed the firm to avoid paying both a 10 per cent import tax and an 18 per cent local tax applicable to short-range missile components.

Two sources told Reuters that Adani executives, during the course of the investigation, admitted to the misclassification but did not provide further details.

In such cases, companies are required to pay the unpaid duty along with a 100 per cent penalty, which could raise Adani Defence’s total liability to about $18 million.

The alleged tax evasion is significant, exceeding 10 per cent of Adani Defence’s 2024-25 revenue of $76 million and accounting for more than half of its profit.

In a statement, the Adani Group said that the DRI had sought clarifications on its imports based on their interpretation of customs rules.

The company added that it had provided supporting documents and that the “issue stands closed from our end,” without confirming whether any payments were made to settle the matter.

According to one of the officials, the investigation pertains to non-explosive parts and accessories used in short-range missile systems and their launching mechanisms.

Customs data show that Adani Defence imported similar components worth $32 million from Russia since last year, while total defence-related imports from Russia, Israel, and Canada have reached about $70 million since January 2024.

The sources did not specify to Reuters which shipment was under investigation.

The Adani Group has pointed to a government rule change introduced in September 2025 that now allows tariff-free import of all missile parts.

Officials maintain that earlier rules did not extend such exemptions to short-range systems.

The DRI has in recent months issued similar warnings to companies like Samsung and Volkswagen over import tariff misclassifications, both of which are contesting the charges.

The ongoing probe marks the latest in a series of regulatory reviews involving the Adani Group.

India’s markets regulator recently cleared the conglomerate in two separate cases of alleged stock manipulation, though it continues to face over a dozen other investigations related to securities norms.

The group has also been under scrutiny by the revenue department since 2014 for alleged over-invoicing of coal imports, an accusation it has denied while pursuing legal action to challenge the probe.