India’s electric vehicle (EV) ecosystem is witnessing transformative growth, particularly in Tier-2 and Tier-3 cities where affordability and operational efficiency are critical for adoption. A key enabler of this shift is the Battery-as-a-Service (BaaS) model, which separates battery costs from vehicle prices, lowering upfront payments and making EV ownership accessible for small operators, fleet managers, and gig workers. By offering predictable monthly costs, fast battery swaps, and centralized battery management, BaaS ensures higher uptime, better lifecycle performance, and easier technology upgrades. This approach not only improves profitability for last-mile logistics and public transport operators but also addresses concerns around reliability, battery lifespan, and operational risks.
In a recent interview, Rashmi Verma spoke with Mr. Dhirag Agrawal, Chief Business Officer of Mufin Green Finance, to discuss how innovative financing and strategic partnerships are accelerating EV adoption across smaller towns in India. Mr. Agrawal highlighted that flexible financial products, revenue-linked EMIs, and collaborations with OEMs and battery providers are helping overcome cost, infrastructure, and policy barriers. He emphasized Mufin’s vision of making clean mobility more affordable, sustainable, and scalable, while empowering operators in non-metro markets to adopt EVs with confidence. The interview provides insights into how BaaS, combined with smart financing, is shaping India’s EV future.
How do you see Battery-as-a-Service (BaaS) shaping the future adoption in India, especially in Tier-2 and Tier-3 cities?
Battery-as-a-Service can transform EV adoption by separating the cost of batteries from vehicles, which lowers upfront payments and makes ownership affordable. In Tier-2 and Tier-3 cities, most buyers are small operators who focus on cash flow and quick turnaround. BaaS provides predictable monthly costs, fast swaps, and reduces downtime, enabling higher daily earnings. Centralised battery management ensures safety, better lifecycle performance, and easy upgrades to new technology without replacing vehicles. As non-banking financing companies and impact investors expand credit availability, BaaS will align well with local financing needs. This combination of financial innovation and operational efficiency makes BaaS a strong driver of electrification in smaller cities.
High upfront cost remains a barrier for SMEs and fleet operators. How exactly can BaaS lower entry costs and make EVs more affordable?
The upfront cost of EVs is driven mostly by batteries, which can make up nearly 40 per cent of the vehicle price. By separating the battery from the vehicle and shifting it into a subscription or per-use cost, BaaS lowers the initial purchase price significantly. This allows small businesses and fleet operators to buy more vehicles with the same capital. Predictable battery lease payments simplify cash flow management, while pooled warranties and professional maintenance further reduce costs over time. With added support from lenders who use telematics-based underwriting and revenue-linked EMIs, BaaS makes EV ownership not only affordable but also less risky for SMEs and gig workers across India’s smaller towns.
The GST disparity, 5% on EV versus 18% on batteries, has been highlighted as a challenge. What changes in policy could support the BaaS model better?
The GST mismatch between vehicles and batteries raises costs for BaaS providers and ultimately for end-users. A straightforward step would be to align battery GST with EVs at 5%, reducing leasing and swapping costs. Policymakers could also allow full input tax credits for battery leasing firms, which would make subscription models more attractive. Other supportive measures include accelerated depreciation for battery assets, tax breaks for battery-swapping infrastructure, and incentives for recycling and second-life applications. Clear regulatory guidelines on leased battery ownership and safety standards would further de-risk the ecosystem. These changes would strengthen the business case for BaaS and attract large-scale institutional investment.
Beyond reducing costs, what other advantages does BaaS bring for last-mile logistics and public transport operators?
For last-mile logistics and public transport, uptime is critical because revenue depends on maximum vehicle utilisation. BaaS allows operators to swap batteries within minutes, reducing downtime and improving daily routine. Centralised battery monitoring ensures better performance, extended lifespan, and fewer breakdowns, which increases operational reliability. Standardised batteries also help operators plan routes with predictable range and optimise scheduling. Data shared by BaaS providers enables smarter fleet management, including load planning and route optimisation. Another key advantage is technical flexibility. Operators can upgrade to newer, higher-density batteries through their service provider without replacing the entire fleet. This protects them from technology risks and ensures long-term sustainability in competitive transport sectors.
What role can financing innovation play in accelerating EV adoption across smaller towns and cities?
Financing innovation is central to expanding EV adoption in Tier-2 and Tier-3 towns, where affordability and credit access are the main barriers. Flexible products such as micro-EMIs, pay-per-use leases, and revenue-linked repayment models align payments with actual earnings. Blended capital structures, where concessional debt from development institutions combines with commercial lending, lower interest rates and extend repayment tenors. Telematics-based data improves underwriting by tracking usage and performance, reducing risks for lenders and increasing confidence in lending to informal operators. Instruments like green bonds and non-convertible debentures create liquidity for EV-focused non-banking financial companies. Together, these innovations make EVs and BaaS solutions viable for smaller cities and community-based fleet operators.
How is Mufin Green Finance contributing to building solutions for EV adoption through innovative financing models?
Mufin Green Finance has positioned itself as a key enabler of EV adoption by combining financing with operational partnerships. In 2025, it secured fresh debt and equity capital, including international investment lines, to expand vehicle and battery financing for small businesses and drivers. These initiatives allow data-driven risk management, innovative leasing models, and bundled offerings that include both vehicles and batteries. By bridging financing gaps in Tier-2 and Tier-3 markets, Mufin is reducing entry barriers, expanding EV access, and creating scalable solutions for last-mile mobility operators.
Are you seeing greater demand from Tier-2 and Tier-3 markets for EV financing compared to metro cities? What are the key trends?
Yes, EV financing demand is shifting strongly towards Tier-2 and Tier-3 cities. In these markets, EVs are primarily used for income generation through e-rickshaws, delivery vehicles, and small commercial fleets. Operators prefer lower EMIs, short-tenor leases, and bundled BaaS models that keep entry costs manageable. Financiers are responding with telematics-based lending, cash-flow linked repayment, and flexible lease structures. Development finance institutions are supporting these efforts with concessional credit lines that reduce overall borrowing costs. Local dealer networks and partnerships with OEMs are further helping distribute vehicles and financing solutions. These trends highlight that smaller cities, not just metros, are becoming the growth engines for EV adoption in India.
Partnerships often drive scale in new models. How is Mufin Green Finance collaborating with OEMs, fleet operators, or battery providers to promote BaaS?
Mufin Green Finance has built partnerships across the EV ecosystem to scale BaaS adoption. It acquired a stake in UrjaMobility to strengthen its battery leasing capability and teamed up with Roadcast to integrate GPS tracking and telematics into financed vehicles. These collaborations enable Mufin to combine financing with operational oversight, creating a package that includes vehicle loans, battery leasing, and real-time monitoring. By working closely with OEMs and battery providers, Mufin helps ensure standardisation in battery specifications, warranty structures, and service protocols. Such integrated solutions reduce risk, lower operating costs, and make BaaS more attractive for fleet operators, particularly in non-metro markets where support infrastructure is still developing.
What are the biggest hurdles, policy, infrastructure, or financing, that still need to be addressed to make BaaS sustainable in India?
BaaS faces challenges that cut across policy, infrastructure, and financing. On policy, the main issue is GST disparity, which makes batteries significantly more expensive under leasing models. Infrastructure challenges include fragmented standards for battery size and technology, limited swapping networks, and weak second-life recycling capacity. Financing hurdles stem from the lack of long-term, low-cost capital for building battery pools and funding swap infrastructure. Clarity on battery ownership, safety certification, and recycling norms is also essential for investor confidence. Unless these issues are resolved, the economics of BaaS will remain fragile, limiting its ability to scale nationwide beyond pilot projects in select urban clusters.
Looking ahead, what is Mufin Green Finance’s vision for enabling cleaner and more affordable mobility in India?
Mufin Green Finance envisions accelerating EV adoption by focusing on affordability, accessibility, and sustainability. Its strategy combines direct financing with ecosystem partnerships to make vehicles and batteries available as bundled solutions. By expanding into Tier-2 and Tier-3 towns, Mufin aims to reach the heart of India’s EV growth, where small operators rely on vehicles for income. Investments in battery leasing, telematics-enabled credit, and technology-driven risk assessment allow it to scale financing while reducing defaults. Mufin is also mobilising institutional debt and green investment lines to expand capital availability. The long-term vision is to create cleaner, commercially viable mobility models that support livelihoods and India’s broader sustainability goals.