Why India’s EV Dreams Can’t Be Built on Subsidies Alone

In June 2024, Gensol Engineering Ltd. pitched a ₹100 crore equity investment to the IIT Alumni Social Fund. The proposal highlighted electric taxis, green steel, and sustainability-focused infrastructure—aligned with India’s growing climate and clean-tech ambitions.

While the presentation was polished and the documentation in order, the fund declined the investment based on governance concerns. Nearly a year later, those doubts were validated. In April 2025, the Securities and Exchange Board of India (SEBI) released a scathing interim order against Gensol and its promoters—detailing serious financial irregularities, fraudulent submissions, and diversion of funds.

In a detailed LinkedIn post, Satish (H.) Mehta, Social Impact Fund Administrator for Electric Vehicle and Green Steel, shared the story behind that initial pitch, the decision to walk away, and the deeper problems it revealed about how subsidies are shaping parts of India’s climate startup ecosystem.

Gensol’s ₹100 Cr Pitch and Why It Was Rejected

On June 24, 2024, Gensol founders Puneet Singh Goyal and Anmol Singh Jaggi made their pitch to the IIT Alumni Social Fund. At the time, electric mobility and green steel were gaining significant traction among policymakers and investors alike.

The pitch was well-structured and seemingly aligned with India’s energy transition narrative. However, the fund laid out three critical conditions:

• Clear separation of powers between shareholders, board, and management
• Appointment of a concurrent auditor to oversee banking transactions
• Commitment to a public listing within six months, with prior due diligence from a registered investment banker

Gensol declined these terms. The deal didn’t proceed. But the fund kept tracking the company as part of its standard post-engagement protocol.

BluSmart-Gensol Scandal: Loans, Fraud, and Fund Diversion

In April 2025, SEBI released an interim order against Gensol and its promoters. The findings included:

• ₹977.75 crore in loans raised, with over ₹262 crore unaccounted
• Diversion of funds to personal luxuries, including a DLF Camellias apartment, golf equipment, and personal transfers
• Submission of misleading documents to government lenders such as PFC and IREDA
• Circular transactions routed through entities like Go-Auto Pvt Ltd to mask fund misuse

Reflecting on this, Satish Mehta wrote:

“Gensol wasn’t building green infrastructure. It was building opacity.”

Clarification from Puneet Goyal

Following Mehta’s LinkedIn post, Puneet Goyal reached out to clarify key factual points. According to Goyal, Gensol is not a shareholder in BluSmart, nor is BluSmart a shareholder in Gensol. He emphasized that he currently has no association or concern with Gensol.

He also shared a detailed document outlining his personal entrepreneurial journey, which Mehta acknowledged as “an interesting document.” 

Matrix and the Green Steel Project: Another Subsidy-Driven Idea

Around the same period, Gensol’s sister company—Matrix—approached the fund with a new proposal: a green steel manufacturing plant in Chhattisgarh. The pitch claimed backing from a senior IIT Kharagpur metallurgist and intended to sell to Balaji Alloys.

But the fund’s own technical advisors raised red flags. The science didn’t add up, the economics were flawed, and the model was entirely subsidy-dependent.

This pattern—of creating ventures designed around accessing government benefits rather than solving market problems—had become clear.

How Subsidies Distort Startup Models in Climate-Tech

Both Gensol and Matrix were built on a fragile premise: that government subsidies could offset the lack of a viable, self-sustaining business model.

According to Mehta:

“Any subsidy-seeker doesn’t make a good investee. The business is set up for considerations other than business.”

This mindset, while not unique to Gensol, is pervasive across parts of India’s green and mobility sectors. Electric bus manufacturers, public fleet operators, and clean energy startups often run loss-heavy models sustained by subsidy flows rather than market revenue.

Why Go Mobility Reframed Green Transport as Public Infrastructure

These experiences led the fund to rethink its thesis. Rather than viewing green mobility as a venture category, they reframed the space as a public infrastructure challenge.

The outcome was the launch of the Go Mobility Platform—a model that prioritizes long-term social value over investor returns.

As Mehta explained:

“We no longer look upon green mobility as a business. We look upon it as a social challenge. That changes the lens.”

This pivot was grounded in a core insight: public transport must be free. Not every noble idea is investable. Some must be treated as public goods.

What Founders and Investors Must Learn from the Gensol Case

• Governance comes first: Strong checks and accountability must precede ambition.
• Subsidy-led models distort incentives: Funding tied to compliance, not customers, leads to weak fundamentals.
• Green narratives need real economics: Environmental value cannot compensate for business model failure.
• Not all problems need private capital: Public infrastructure may require state-led or hybrid funding.
• Due diligence protects ecosystems: Saying no early can prevent ecosystem-wide fallout later.

Gensol’s Legacy: Redefining Green Startup Governance

The Gensol case is not just about regulatory action. It is about recognizing a deeper misalignment between intent and execution in climate-driven startups.

Satish Mehta’s early rejection of the pitch, and the clarity he offers a year later, provide important guardrails for future investors and founders.

“Not everything has to be a business. Not everything can be a business.”

As India continues to push forward on its energy transition goals, the startup ecosystem must build with transparency, resilience, and market discipline—before chasing narratives or subsidies.