Adani Defence, a niche arm within the conglomerate’s broader portfolio, supplies drones, missile subsystems and small arms primarily to state security agencies. The probe centres on non-explosive components, structural fittings and launch-mechanism parts imported from Russia, Israel and Canada. Sources indicate that executives, during questioning, acknowledged misclassification, though the company has denied any wrongdoing and stated that it had furnished clarifications to authorities and considered the matter closed from its side.
The disputed tax sum constitutes more than 10 per cent of Adani Defence’s reported revenue of US$76 million in the fiscal year 2024–25, and over half of its profit. Under customs law, confirmed duty evasion can trigger a 100 per cent penalty on top of the amount owed—potentially doubling the liability to the order of ₹154 crore.
Customs and industry analysts note that the crux of the matter lies in tariff classification. Under the earlier regulatory regime, components used in short-range missile systems faced a 10 per cent import duty plus an 18 per cent local tax; by contrast, parts for long-range systems enjoyed exemption. The DRI’s case hinges on proving that the items did not qualify under the exemption and were improperly declared to sidestep levies.
Adani Group has pointed to a government amendment issued in September 2025, which now exempts all missile parts from import duty. However, officials emphasise that the change does not apply retroactively to transactions conducted before the amendment’s enactment.
The investigation arrives at a sensitive moment for the conglomerate, which has endured intense regulatory scrutiny in recent years. While market regulators cleared Adani of two alleged stock-manipulation cases this year, it still faces more than a dozen ongoing probes involving securities rules and import practices.