Adani turmoil a key test for Modi's India Inc

The market rout suffered by Indian tycoon Gautam Adani is the latest corporate scandal to plague one of the world's largest economies despite Prime Minister Narendra Modi's efforts to root out corruption.

Properly investigating the claims of fraud that triggered the sell-off in Adani's companies will be a key test for "India Inc" as the country seeks to attract foreign investment and rival China economically in the 21st century, analysts say.

In its breakneck expansion, Adani's vast business empire conducted "brazen stock manipulation and accounting fraud" that amounted to "the largest con in corporate history", according to US short-seller group Hindenburg Research.

Adani has denied the explosive claims, which accuse the companies of inflating stock prices using offshore tax havens. But an avalanche of selling by spooked investors has wiped more than $100 billion from the group's market value since last week.

Most damning for Modi's government is Hindenburg's assertion that Adani's dodgy activities "seem to be enabled by virtually non-existent financial control".

Adani has used his "immense power to pressure the government and regulators to pursue those who question him", the group said, with investors, journalists, citizens and even politicians "afraid to speak out for fear of reprisal".

The list of corrupt past Indian moguls is long, from fugitive jeweller-to-the-stars Nirav Modi to Vijay Mallya, the "king of good times" behind Kingfisher beverages.

Modi -- no relation to the prime minister -- fled India in 2018 after being accused of defrauding one of India's largest state-backed lenders out of $1.8 billion.

Mallya left the country in 2016 owing more than $1 billion after allegedly defaulting on loan payments to a state-owned bank and misusing the funds.

Both saw their empires collapse under Modi, which helped raise hopes that along with giving regulators more powers he was serious about tackling wrongdoing.

Modi's demonetisation drive in 2016 -- withdrawing almost 86 per cent of banknotes -- was catastrophically handled but the stated aim was to root out corruption and bring all transactions out of the shadows. "I would actually really compliment Prime Minister Modi," Tim Buckley, an Australian energy analyst who monitors India, told AFP. "Seven years ago, crony capitalism was endemic in India."

But Adani's rise could be seen as telling another story, with the mogul's ascent mirroring the meteoric political career of Modi, a fellow native of Gujarat.