NHEV BluSmart Scandal: 2,700 EV Orders Halted Following Co-Founder’s Fund Misuse Allegations

The National Highways for Electric Vehicles (NHEV) has suspended the process of ordering approximately 2,700 electric SUVs from BluSmart, India’s all-electric ride-hailing startup, following allegations of fund misuse by one of the company’s co-founders. This NHEV BluSmart scandal threatens to delay a crucial government pilot project aimed at establishing electric highways across India.

This decision comes at a critical juncture for India’s electric vehicle infrastructure development, as NHEV forms a central component of the government’s ambitious plans to electrify major national highway corridors by 2027. The BluSmart co-founder scandal has raised serious questions about the viability of partnerships between government entities and emerging EV startups.

NHEV BluSmart Scandal: Fund Misuse Allegations Halt Major EV Orders

The BluSmart fund misuse allegations have sent shockwaves through India’s growing electric vehicle ecosystem. As a pioneering all-electric ride-hailing service in India, BluSmart had positioned itself as a cornerstone partner in the government’s e-mobility initiatives. The NHEV’s decision to halt EV orders with BluSmart marks a significant setback for both organizations.

Details of the alleged financial improprieties have not been fully disclosed, but the situation has been deemed serious enough for the government to immediately pause what would have been one of the largest electric vehicle procurement orders in the country’s history. The NHEV BluSmart scandal highlights the vulnerabilities in government partnerships with startups in critical infrastructure projects.

The controversy has raised questions about due diligence processes for startups involved in government projects, especially those receiving significant public funding and playing a role in national infrastructure development. This incident may lead to stricter vetting procedures for companies involved in government-backed EV initiatives.

NHEV’s Response: Emergency Meetings and Risk Assessment

On Friday, the Ethical Governance Committee (EoDB) and NHEV Procurement Committee convened an emergency meeting with working group members to assess the NHEV BluSmart scandal and determine appropriate next steps. The meeting addressed the potential risks associated with proceeding with BluSmart as a key vendor in light of the ongoing controversy.

The NHEV procurement team concluded that placing orders with BluSmart under the current circumstances poses significant risks to the project’s timeline and financial integrity. The decision was particularly difficult given BluSmart’s longstanding participation in NHEV pilots since the program’s inception.

The NHEV, which operates as an ease of doing business (EoDB) pilot adopted by the Central government after successful technical trials, has been tasked with the critical role of developing e-highways connecting major cities and economic corridors in India. The BluSmart co-founder scandal has forced NHEV to reconsider its entire procurement strategy.

Proposed Solution: IREDA and PFC Intervention

To address the immediate challenge of securing the necessary electric vehicles for the pilot project following the NHEV BluSmart scandal, NHEV’s EoDB committee is reaching out to Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC), both of which are financiers for BluSmart.

The proposed solution suggests that if IREDA and PFC take legal action against BluSmart over the alleged financial irregularities, they could potentially acquire the electric vehicles from the company. These vehicles could then be provided to NHEV to continue its pilot project without significant delays.

In an official statement, the EoDB suggested that IREDA and PFC should consider BluSmart’s plans to make internal, rental, and financial adjustments as approved by its board to “come out clean from ongoing regulatory bodies inquiries and actions on irregularities” and become “financially healthy to repay loans and deliver SPEDMM orders to NHEV.”

Impact on National E-Highway Project

The NHEV BluSmart scandal threatens to delay a critical national initiative at a time when India is aggressively pursuing electric mobility solutions to reduce carbon emissions and decrease dependence on imported fossil fuels. The fund misuse allegations could have far-reaching consequences for India’s EV infrastructure development timeline.

The e-highway project represents one of India’s most ambitious green infrastructure initiatives, aiming to create corridors specifically designed for electric vehicles with adequate charging and support infrastructure along major national highways. The BluSmart fund misuse controversy has cast a shadow over this visionary project.

The delay in vehicle procurement due to the NHEV BluSmart scandal could set back the project’s ambitious timeline, potentially impacting the government’s target of transforming 5,500 km of national highways into e-highways by 2027. This setback comes at a time when India is working to accelerate its transition to electric mobility.

NHEV Project Scope and Investment

The NHEV pilot project is comprehensive in scope and represents a significant financial investment from the government. Beyond the 2,700 electric vehicles that were to be procured from BluSmart before the fund misuse allegations, the project involves:

• 345 luxury electric buses for intercity transportation
• 242 roadside assistance vehicles to support EV users
• Hundreds of battery swapping kiosks along highway corridors
• Multiple fast-charging stations to enable long-distance EV travel

The total project cost exceeds ₹6,500 crore (approximately $780 million), making it one of the largest investments in electric mobility infrastructure in India to date. The government has tasked NHEV with transforming 5,500 km of national highway stretches on the Bharatmala and Sagarmala routes into fully-equipped e-highways by 2027.

Next Steps: Cooperative Approach to Project Salvage

The government appears to be taking a collaborative approach to resolving the NHEV BluSmart scandal, seeking to work with financial institutions rather than immediately pursuing alternative suppliers for the electric vehicles. This strategy aims to minimize disruption to the overall project timeline.

According to the EoDB statement, the nationwide expansion of the project will proceed as planned, following recent directives from the Ministry of Cooperation to establish various local Cooperative Taxi Service units. These cooperative units could eventually incorporate the vehicles financed by IREDA and PFC, creating a more distributed and resilient operational model.

The NHEV BluSmart scandal highlights the challenges of implementing large-scale electric mobility projects in an ecosystem where many key players are startups or relatively new companies without long operational track records. It also emphasizes the importance of robust governance and financial oversight mechanisms when public funds are involved in such initiatives.

As India continues its push toward electric mobility, the resolution of this situation will likely influence future procurement policies and partnership models for government-backed infrastructure projects in the sector. The outcome of the BluSmart fund misuse investigation will be closely watched by stakeholders across India’s emerging EV ecosystem.

Published on April 18, 2025 | Updated: April 19, 2025