Gautam Adani's U.S. fraud charges could have far-reaching consequences for India.

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The big story

A meeting was scheduled in New Delhi to discuss business with the head of a $25 billion Indian energy company, the former CEO of a New York-listed energy firm, and one of Asia's wealthiest men.

Vneet Jaain, the CEO of a $25 billion company, took a photo of a document on his cellphone in preparation for the meeting.

The U.S. attorney's office for the Eastern District of New York summarized the amounts owed by the Indian energy company to , previously listed on the NYSE, for bribing Indian government officials.

U.S. prosecutors seized Jaain's phone and other electronic devices as evidence in their months-long investigation and included them in the indictment on Wednesday in a New York federal court on charges related to a massive bribery and fraud scheme.

Gautam Adani, the second most-wealthy Indian man, allegedly met with Indian government officials to advance a "bribery scheme," according to U.S. prosecutors.

It is claimed that approximately $265 million in bribes were given to Indian officials to encourage the state-owned electricity distribution companies to buy solar power from Adani and associated companies at inflated prices.

The indictment contains evidence of a trail left by Adani and his executives, including presentation slides and spreadsheets. One document is said to reveal $7 million paid for a 650 megawatt power purchase agreement and $76 million as a bribe for a 2.3 gigawatt contract.

A federal court has granted the prosecutors an arrest warrant for the billionaire.

Why are U.S. authorities involved?

Billionaire and others are accused of deceiving U.S. and international investors by raising over $3 billion in funding for energy contracts.

According to allegations, the defendants devised a complex plan to pay off Indian government officials in exchange for lucrative contracts worth billions of dollars. Gautam S. Adani, Sagar R. Adani, and Vneet S. Jaain were accused of lying about the bribery scheme while seeking funding from U.S. and international investors, as stated by Breon Peace, U.S. attorney for the eastern district of New York.

James Dennehy, FBI assistant director in charge, stated that Adani and other defendants defrauded investors by making false statements about bribery and corruption while others allegedly tried to conceal the bribery conspiracy by obstructing the government's investigation.

The Securities Exchange Commission joined in, labeling the actions of Adani and two others as a "vast bribery scheme."

The SEC stated that Adani Green raised over $175 million from U.S. investors and Azure Power's stock was listed on the New York Stock Exchange during the alleged scheme, justifying its jurisdiction and cause in the investigation.

What's Adani's response?

The allegations made by the U.S. Department of Justice and the SEC against the directors of Adani Green Energy are "unfounded and rejected."

The Adani Group is committed to maintaining high standards of governance, transparency, and regulatory compliance across all its operations. We assure our stakeholders, partners, and employees that we are a law-abiding organization, fully compliant with all laws.

Azure Power has stated that the company has remained in cooperation with U.S. authorities and its employees implicated in the U.S. indictment are no longer affiliated with the company.

What's the impact on Adani?

Besides the significant decline in its stock price, which resulted in a loss of nearly a quarter of its market value, there have been broader consequences.

The price drops of Adani's bonds have been steep after the indictment news, and there are worries about the company's ability to raise debt in U.S. markets in the future.

Moody's stated that the indictment of Adani Group's chairman and other senior officials on bribery charges is a credit negative for the group's companies.

"When evaluating Adani Group, we prioritize the group's companies' ability to obtain capital to fulfill their liquidity needs and their governance practices."

On Thursday, the Adani Group was compelled to abandon a planned $600 million bond sale.

Even staunch supporters of Adani are starting to question their support for the conglomerate.

GQG Partners, which invested $1.9 billion in Adani companies despite a short-seller attack in 2023, announced that it is currently reviewing the details and considering any necessary actions for its portfolios.

On Thursday, the value of the investment management firm's Sydney-listed shares decreased by a fifth.

Broader implications and impact

The accusations against the Adanis could potentially harm the sentiment of foreign investors and speed up outflows from India. In October, foreign institutional investors withdrew a record amount of money from local stock markets, and November is likely to follow suit.

Gautam Adani's bribery charges in the U.S. make it more complex for foreign investors to decide on investing in India, according to Matt Orton, chief market strategist at Raymond James, as he spoke to CNBC's Tanvir Gill.

"Although the 10% decline in the presented investors with an opportunity to invest, the Adani charges will negatively affect sentiment. In a market where the U.S. is still rising, why introduce headline risk in India now?"

Despite the wider negative sentiment, Orton stated that some Indian equities were still attractive.

Analysts at Citi estimate that Indian banks are exposed to more than $15 billion in borrowings and collateralized loans to Adani Green Energy, the firm under scrutiny.

DBS, a Singapore-based lender, has previously disclosed nearly $1 billion in loans to other Adani companies. The bank declined to comment on the matter.

In addition to investors and financial institutions, regulators in India are also facing intense criticism for their ties to Adani.

Why isn't India's Central Bureau of Investigations saying the same as the Federal Bureau of Investigations about Adani committing a criminal act? Why isn't the Securities and Exchange Board of India (SEBI) saying the same? questioned India's opposition leader Rahul Gandhi, according to a CNBC translation.

The stock market regulator's chair, Madhabi Buch, is facing calls to be sacked after being accused of a conflict of interest while investigating Adani group companies, as short-seller Hindenburg alleged earlier this year.

Need to know

The RBI is reportedly planning to launch a cloud platform for financial firms, which will be accessible only to IT companies incorporated in India. This initiative is part of the central bank's push to localize payments and financial data. The RBI's cloud service, which will be launched on a small scale in 2025 before expanding, will offer smaller banks and financial firms a cheaper alternative to services from dominant cloud players like Amazon Web Services and Microsoft Azure.

The UK and India will resume trade deal talks next year, as agreed upon by Prime Ministers Keir Starmer and Narendra Modi during their bilateral meeting at the G20 Summit in Brazil. The negotiations were halted in the summer due to general elections in both countries. Additionally, India will establish two new Consulates General in Belfast and Manchester, as announced by Prime Minister Modi.

Since September, India's Nifty 50 index has been retreating from its all-time closing high of 26,277.35 points. Despite that recent pullback, Matt Orton, who is the chief market strategist at asset management firm Raymond James Investment Management, is still bullish on the Indian market, and is especially keen on one "top-quality" stock.

What happened in the markets?

India's stock markets have been experiencing a slide, with the Nifty 50 index falling another 0.7% this week. This has brought the year's total returns to 7.45%. The index has dropped by 11% since its all-time high earlier this year.

Over the past week, the 10-year Indian government bond yield has remained relatively stable at 6.82%.

Amundi Group Chief Investment Officer Vincent Mortier stated on Biz Focus Hub that his firm has a "very overweight conviction" on India due to its domestically driven demand, which helps to protect it from external shocks. Despite the recent decline in India's stock markets, Mortier remains optimistic about the country's future, as earnings growth forecasts for the next two years are projected to be around 20%, making the market and economy "very promising."

Seema Mody, a CNBC correspondent who recently returned from a trip to India, stated that investor confidence in the country is increasing due to President-elect Donald Trump's strong relationship with Prime Minister Narendra Modi and his potential stance against China, which could benefit the emerging market.

What's happening next week?

The sustainable energy unit of the government-owned power company NTPC, NTPC Green Energy, is listed on Wednesday.

November 22: HSBC PMI for India, Eurozone HCBOB PMI for November, and Japan's October consumer price index.

November 27: NTPC Green Energy IPO, U.S. Federal Reserve minutes for November meeting, Personal Price Consumption Expenditure index for October - Alternative Version: On November 27th, the NTPC Green Energy IPO, the U.S. Federal Reserve minutes for the November meeting, and the Personal Price Consumption Expenditure index for October will be released.