UP govt scraps ₹25,000 crore MoU with Bengaluru-based Puch AI citing credibility concerns

The Uttar Pradesh administration has rescinded a proposed ₹25,000 crore Memorandum of Understanding (MoU) previously signed with Puch AI, a Bengaluru-based startup, intended for the development of artificial intelligence infrastructure. The state cited the firm's lack of financial credibility as the primary reason for the cancellation.

In an official statement released via InvestUP on Thursday, the government clarified that the decision followed a formal review conducted in accordance with standard operating procedures. This assessment revealed that the company lacked the necessary net worth and reliable financial backing required to manage a project of such significant scale.

"As per standard protocols laid by the state government, the MoU signed with Puch AI on 23 March 2026, was reviewed. Necessary details were sought from the investor, but they were not provided in a timely manner. Due diligence showed a lack of net worth and credible financial linkages for the project's scale," the statement said.

Consequently, the agreement has been terminated with immediate effect, nullifying all rights and obligations between the involved parties.

Authorities emphasised that this action was taken to uphold transparency and ensure high standards of integrity in state governance.

The now-voided MoU, unveiled earlier this week, was promoted as a cornerstone initiative to transform Uttar Pradesh into a leading hub for emerging technologies.

On 23 March, Chief Minister Yogi Adityanath stated that the investment was expected to fund the creation of AI Parks, massive data centre facilities, an AI Commons for governance applications, and a dedicated AI University focused on youth skill development.

However, the initial announcement drew sharp criticism on social media. Numerous users raised concerns regarding the startup’s actual capacity to execute a multi-billion-dollar undertaking.

Addressing these scepticism-driven reports, Adityanath clarified in a 24 March post on X that MoUs facilitated through InvestUP are inherently non-binding. He explained that these agreements represent preliminary phases that precede rigorous due diligence and evaluation.

The Chief Minister further noted that any formal approvals remain contingent on a comprehensive assessment of the investor's proposal, asserting that agreements would be dissolved if a firm fails to satisfy the mandatory criteria.

InvestUP echoed this stance, reiterating that any potential investor found deficient during the evaluation process would face automatic termination of their MoU.

In response to the fallout, Samajwadi Party President Akhilesh Yadav alleged on Thursday that the situation has discredited the state government.

He has called for a thorough investigation into all Memorandums of Understanding signed by the current administration.

“Such agreements have been made in the past with companies lacking any solid financial background, merely to create an impression and mislead the public,” Yadav said, accusing the BJP of relying on “event-based politics and propaganda”.