Last week, Hindenburg Research, a US-based short-selling firm, accused the Adani Group, one of India's largest industrial conglomerates, of a yearslong scheme involving stock manipulation and accounting fraud — claims denied by Adani.

The 106-page report also said Adani Group is saddled with debt and claimed its share price is overvalued.

Since the report was released, the Adani Group has lost an estimated $85 billion (€77.8 billion) in market value, with the group's chairman and founder, Gautam Adani, personally losing billions.

The firm on Wednesday abruptly called off a $2.5 billion share offering citing "market volatility.'' 

It said on Thursday that it will review its plans for raising capital. 

Adani calls on Indian nationalism

In a 413-page response, the Adani Group hit back and portrayed Hindenburg's allegations as "baseless and an attack against India itself."

"This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India," the company said in a statement.

Hindenburg responded by saying that fraud cannot be obfuscated by "nationalism or a bloated response" that ignores every key allegation.

Several Indian opposition lawmakers also criticized Adani's response.

"It is a matter of concern that a group against whom serious allegations have been made is using the Indian flag and has the audacity to say that the report on the company is an attack on India. Parliament needs to have a discussion on this and send out a message that Adani is not India," said parliamentarian Manoj Jha of the Rashtriya Janata Dal (RJD) party on Tuesday.

"When did Adani become India?" asked Manish Tewari, leader of the party Indian National Congress (INC).

Adani Group and 'Make in India'

The Adani Group comprises several companies ranging from energy to transportation and infrastructure development in countries around the world. 

By financing and building ports, roads, rail, airports and power infrastructure, Adani Group is crucial to India's economic ambitions under Prime Minister Narendra Modi.

The group has been a major supporter of Modi's initiatives, such as "Make in India" and "Digital India."

The family-run enterprise also has close ties to the ruling political class and its access to loans from Indian banks, especially the State Bank of India (SBI) and Life Insurance Corporation (LIC) of India, has largely funded the conglomerate's acquisition-driven growth.

Indian economist Arun Kumar told DW that the report would impact Adani's business in the short term and could affect foreign institutional investor interest in India. 

"The big question is how it might affect Modi's image and how he plays out the current controversy in the coming weeks. Will he distance himself?" Kumar said.

Adani heading for trouble?

Kumar pointed out that the Adani Group is deeply overleveraged and cited a recent report by CreditSights, a unit of Fitch Ratings.

The report, published last August, claimed the Adani Group was aggressively investing across existing and new businesses and that it was predominantly funding those investments with debt.

The report said Adani's growth strategy was piling pressure on its credit metrics and cash flow, warning, "in the worst-case scenario" it may spiral into a debt trap and possibly a default.

"I am waiting for statements by both the Reserve Bank of India and the regulatory Securities Exchange Board of India about these allegations of Adani's inappropriate use of off-shore tax havens," Lekha Chakraborty, professor and chair at India's National Institute of Public Finance and Policy (NIPFP), told DW.

"Inappropriate deals indeed widen economic inequalities and that is definitely a matter of serious concern, and needs authentic investigation," Chakraborty added.

"The nuances of distinction between what is 'ethical' and what is 'legitimate' need to be understood in such cases," she said.

Edited by: Wesley Rahn