Originally Published The Economic Times Published on Nov 28, 2024

US prosecutors indicted Adani Group officials. Several countries are reviewing Adani projects. This impacts India's global image and connectivity goals. India's private sector needs to increase its role in international development. This will support India's foreign policy and strategic ambitions.

Private sector diversification needed for India’s global infra push

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On Nov 20, US federal prosecutors indicted top functionaries of Adani Group on charges of graft and fraud for securing a RE project in India. The business conglomerate has strongly denied these allegations and has committed to deploy every legal tool in its arsenal to acquit its green energy company, Adani Green, from these charges.

Irrespective of the merits of the case against Adani, consequences for India's global profile are serious, as it tarnishes the reputation of the Indian private sector and stifles achievements of India's strategic goals. Earlier this week, French oil major TotalEnergies decided to cease financial contributions to its Adani Group investments. Following the indictment, Kenyan President William Ruto publicly rescinded the ongoing Nairobi Jomo Kenyatta International Airport (JKIA) renovation and 30-yr operationalisation contract, and a $736 mn partnership Adani signed with the Kenyan energy ministry last month to construct power transmission lines.

Irrespective of the merits of the case against Adani, consequences for India's global profile are serious, as it tarnishes the reputation of the Indian private sector and stifles achievements of India's strategic goals.

The US International Development Finance Corporation (DFC) reinitiated due diligence in their Adani partnership project of redeveloping the Colombo port in Sri Lanka. The Mohammad Yunus-led Bangladeshi caretaker government also announced that they are reviewing and reassessing Adani's Bangladesh energy generation contracts between 2009 and 2024, totaling 5 GW.

The conglomerate is also involved in overseas power, infrastructure and port development projects in countries including Tanzania, Israel, Greece, Indonesia, Nepal, Vietnam and Australia. Collectively, these comprise 7 ports, 4 airports, and 3 metals and mining projects.

Adani Group is one of India's primary private sector companies that actively supports GoI's connectivity ambitions in South Asia, Africa and Indo-Pacific at large. Foreign policies such as the 'Neighbourhood First,' 'Free, Open and Inclusive Indo-Pacific,' and 'Act East' are reinforced by Indian public and private sector companies who go out and develop infrastructure and capacity in partner countries, thereby propelling New Delhi's foreign policy objectives.

The bid is to build sustainable, affordable and resilient infrastructure that supports economic development and bolsters supply chain resilience for increased trade. Thus, Indian partnerships are sustainable, 100% ODA (official development assistance)-based, respect sovereignty and territorial integrity, and account for local ownership.

Adani Group is one of India's primary private sector companies that actively supports GoI's connectivity ambitions in South Asia, Africa and Indo-Pacific at large.

Another geopolitical reason for India's connectivity and development outreach is to restrict China's BRI and Beijing's geopolitical influence caused by it. During 2013-23, BRI afforded China geopolitical influence in the developing world due to its first-mover advantage in the connectivity and development space. In the same timeframe, BRI wreaked financial havoc on developing countries because of its predatory, commercial, market-imperialist, geostrategic and dual use infrastructure development plans, and issues of graft and mismanagement.

As a geostrategic and geo-economically key geography from a supply chains and trade perspective, India can emerge as the connector between the East and West, especially as the Indo-Pacific geospatial construct gains global relevance. New Delhi realises this, thereby instrumentalising and incentivising Indian private companies to go out and build and develop. Increased regional and oceanic connectivity, propelled by Indian private and public sector companies, will bode well for India's connectivity ambition for an East-West corridor with India in the centre.

Yet, as Adani Group is the major Indian private infrastructure player in the international arena, showcased by the aforementioned project count, recent developments also hamper India's connectivity strategy. As mentioned above, Kenya, Bangladesh, the US and Sri Lanka are already reconsidering their infrastructure partnerships with New Delhi. Countries such as Greece, Australia and Tanzania may follow suit, if not by rescinding contracts, agreements and partnerships, then at least by reassessing the finances, commitments and investment sources for these development projects.

As Adani Group is the major Indian private infrastructure player in the international arena, showcased by the aforementioned project count, recent developments also hamper India's connectivity strategy.

The indictment can also potentially impact India-US bilateral relations and the emerging supply chain resilience and infrastructure development partnerships among Quad countries and in the Indo-Pacific Oceans Initiative (IPOI). India's credibility as a development partner and an alternative to China has come under a scanner, presenting a roadblock in its global connectivity ambitions.

This incident is emblematic of the larger structural problem of proportionately lesser Indian private sector involvement in the international development and connectivity space. Due to a general lack of willingness in the private sector to go out in the international arena and build and develop, there are only a handful of companies that India can rely on. When faced with challenges, it is New Delhi's foreign policy advancement, critical to India's global positioning, which suffers alongside.

It's imperative for the private sector to step up as a whole and provide a diversified basket. India's strategic ambitions are too big for it to be confined by only a handful of private stakeholders. India's private sector needs to rise to the challenge.


This commentary originally appeared in The Economic Times.

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Authors

Harsh V. Pant

Harsh V. Pant

Professor Harsh V. Pant is Vice President – Studies and Foreign Policy at Observer Research Foundation, New Delhi. He is a Professor of International Relations ...

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Prithvi Gupta

Prithvi Gupta

Prithvi works as a Junior Fellow in the Strategic Studies Programme. His research primarily focuses on analysing the geoeconomic and strategic trends in international relations. ...

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