UP Govt Scraps ₹25,000 Cr MoU with Puch AI Days After Signing Over Credibility Concerns

The Uttar Pradesh government has cancelled a ₹25,000 crore memorandum of understanding (MoU) with AI startup Puch AI, days after announcing the ambitious project. The development followed concerns over the company’s financial credibility and due diligence gaps.

In a statement on X by Invest UP, the state’s investment promotion agency, the government said the MoU, signed on March 23, was reviewed in accordance with standard protocols. 

As per standard protocols laid by State Government, the MoU signed with Puch AI on 23 Mar 2026 was reviewed.

Necessary details as per SOP were sought from the investor, but they failed to provide them timely. Due diligence showed lack of net worth and credible financial…

— INVEST UP (@_InvestUP) March 26, 2026

“Necessary details as per SOP were sought from the investor, but they failed to provide them in a timely [manner],” the agency said, adding that due diligence revealed a “lack of net worth and credible financial linkages” required for a project of such scale. 

Following the review, the agreement has been terminated with immediate effect, with “no rights or obligations” remaining between the parties. 

Siddharth Bhatia, the startup’s Founder, did not respond to AIM’s request for comment. 

The now-scrapped deal had proposed developing AI parks, data centre infrastructure, and an AI-focused university in Uttar Pradesh, positioning the state as a major hub for emerging technologies.

However, scrutiny quickly emerged over Puch AI’s credentials, with reports indicating that the startup, founded barely a year ago, lacked the financial scale and track record to execute a ₹25,000 crore project. 

Officials maintained that the MoU was only a preliminary, non-binding agreement, subject to detailed evaluation. UP Chief Minister Yogi Adityanath had earlier clarified that such agreements are exploratory in nature and can be withdrawn if requirements are not met. 

Bhatia had defended the proposal in a post on X, stating that the project was designed as a phased public-private partnership backed by external investors, and would not rely on taxpayer funds. 

“We have not taken any money, any GPUs, or any other form of support from the government. The only part of this MoU that involves citizens is that they’ll receive free access to AI, in their own language and through familiar interfaces, via AI Commons,” he had said.

He mentioned that there had been a bug in Google’s AI that confused Puch AI with another company called Pucho AI. “The ₹42.9 lakh revenue figure belongs to Pucho AI, not Puch AI. Puch AI’s revenue is not public,” he added. 

This has sparked wider debate around due diligence in large-scale government-tech collaborations, especially in emerging sectors like AI, where ambitious announcements often outpace execution capabilities.