Ever-since 2016, India has seen a gradual rise in the start-up ecosystem fueled by a combination of diverse factors such as, educated population, expanding digital economy and supportive government policies. Thanks to the interplay of these factors, India has no become the third-largest startup hub globally, after the United States and China. However, with every new accomplishment comes certain challenges which highlight the sensitivity these start-ups possess.
One such case is the BluSmart fraud, a significant scandal in India’s electric mobility sector, that has shaken the startup dynamics and shed light on some serious lapses in the corporate governance domain.
BluSmart and Gensol Engineering
Co-founded by Anmol Singh Jaggi in 2018, BluSmart began as an electric ride-hailing startup operating over 8,000 EV taxis across the metro cities of New Delhi, Mumbai, and Bengaluru. The company set itself apart as a clean, reliable alternative to cab services provided by Uber and Ola. Gensol Engineering Ltd. which was a publicly listed company, was founded by Jaggi in 2007, and used to procure electronic vehicles to lease them out to BluSmart.
The Fraud Exposed
What initially appeared as a promising venture with its sustainable plans and innovative techniques is now in the midst of a controversy due to fund diversion, false claims and corporate mismanagement.
In April 2025, the Securities and Exchange Board of India (SEBI) launched an investigation into Gensol Engineering following the allegations of financial fraudulence. SEBI’s search revealed that Gensol had secured loans worth INR 978 crore from the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC) between the 2021 and 2024 period.
These funds were taken to purchase approx. 6400 vehicles, but only approx. 4700 were actually procured from the number. The total expense was roughly for INR 568 crore, which left the balance INR 262 crore unaccounted for.
SEBI’s investigation uncovered that a major portion of the funds was used for personal expenses by Anmol Jaggi, which included the purchase of INR 42 crore luxury apartment in DLF Camellias, and a super-premium golf set worth INR 25 lakhs apart from other hidden expenses.
Consequences and Impact
As soon as this information was made public, BluSmart decided to suspend all its operations with immediate effect. The sudden shutdown left numerous drivers unemployed and raised concerns amongst customers regarding their prepaid balances. Additionally, Gensol’s stock price fell by 85% in 2025, and the credit rating agencies gave poor score due to the rising troubles.
The findings suggested that the numbers were wrongly quoted by BluSmart top executives, orders were placed without any official payments, false portrayal of their capabilities – all without the knowledge of auditors, independent directors or regulators.
SEBI barred brothers Anmol and Puneet Jaggi from holding any position in the company and from accessing the securities market. An audit of Gensol Engg. was also initiated to further investigate the extent of financial discrepancies.
Larger Implications
This unexpected scandal sent shockwaves across the startup system, with fellow entrepreneurs emphasizing the importance of ensuring ethical conduct and transparent practices always. Similar to these scams, there have been other startup cases also in the past, which have seen the negative impact and eventual shutdown of either the business or the mastermind being thrown out, due to malpractices and unethical techniques being used to cheat the customers.
This case has shown the weaklings in India’s corporate governance and financial framework, with the promoters being allowed to carry out such misleading activities without anyone’s knowledge.
Apart from BluSmart, some other startups that are infamous for their irregularities and financial misreporting were:
- GoMechanic (2023) – The co-founders admitted to inflating revenue numbers to mislead investors
- Zilingo (2022) – The CEO was suspended from the operation of the fashion-tech platform.
- TinyOwl (2016) – Allegations of internal mismanagement and overexpansion were reported
Conclusion
As with every fraudulent activity that comes to public knowledge, the damage is not just on the accused. The honest founders, genuine companies and sincere investors also end up facing scrutiny and reduced governmental support for no fault of theirs.
The BluSmart case underlines in bold how there is a gap to be filled in ensuring a robust corporate governance system that must be the foundation for any entrepreneur to stay clear of any mismanagement and maintain trust in the start-up ecosystem of the country.
Be First to Comment