The Uttar Pradesh government has cancelled a Rs 25,000 crore MoU with Bengaluru-based startup Puch AI just days after signing it, following a social media storm and questions from the Opposition over the young firm’s ability to execute such a large AI investment project. Officials said the decision came after the Yogi government canceled the Puch AI MoU over concerns about the company’s financial strength and transparency.
The Rs 25,000 crore MoU, signed on 23 March, was part of the Uttar Pradesh government’s broader push to position the state as a hub for emerging technologies and artificial intelligence. Under the proposed Uttar Pradesh government investment, Puch AI was expected to help build AI parks, data centre infrastructure, and AI-led services in the state.
According to Invest UP, the state’s investment promotion agency, the agreement underwent a review “as per standard protocols laid by the State Government.” During this Invest UP due diligence process, officials sought detailed financial and project-related information from the investor, but the Puch AI startup “failed to provide them timely,” the agency said in a post on X (formerly Twitter).
As per standard protocols laid by State Government, the MoU signed with Puch AI on 23 Mar 2026 was reviewed.
— INVEST UP (@_InvestUP) March 26, 2026
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…
Due diligence subsequently revealed that the Bengaluru-based AI startup did not have adequate net worth or credible financial linkages in line with the scale of the Rs 25,000 crore MoU, prompting the state to terminate the agreement with immediate effect. The Invest UP statement stressed that the MoU was being scrapped “in the interest of transparency and the highest level of probity in governance,” echoing Yogi Adityanath’s transparency norms push.
Sources in the Chief Minister’s Office said Yogi Adityanath has now directed Invest UP officials to strictly verify the credentials of startups before finalising high-value MoUs in the future. He has also asked senior bureaucrats to monitor social media more closely so that potential red flags around large AI investment in Uttar Pradesh are caught early, warning of strict action if similar lapses occur again.
The Puch AI MoU had triggered widespread social media backlash over Puch AI soon after it was announced, with startup founders, investors, and users questioning how a nascent company founded only in 2025 could deliver on a multi-billion-rupee commitment. Posts highlighting the company’s small size and limited public financial trail quickly went viral, adding to the pressure on the Uttar Pradesh government to justify the deal.
Amid the controversy, Yogi Adityanath had earlier issued a clarification that such agreements are non-binding and only a preliminary step before rigorous due diligence and approvals. He underlined that any prospective investor that fails to meet financial and technical criteria would see its MoU automatically terminated, framing the Puch AI case as part of that process.
In its communication on X, Invest UP underlined that, following the review, “no rights or obligations remain” from the cancelled Puch AI MoU, signalling that the state is cutting all formal ties with the proposal. Officials reiterated that future Uttar Pradesh government investment agreements in emerging tech will be anchored in stricter scrutiny of net worth and financial linkages to avoid repeat controversies.
Puch AI, a Bengaluru-based AI startup founded in 2025 by Siddharth Bhatia, describes its mission as making artificial intelligence accessible to ordinary Indians through regional languages and familiar interfaces such as WhatsApp and voice calls. The company argued that the collaboration with Uttar Pradesh would be structured as a public–private partnership with no cost to taxpayers, but the lack of satisfactory financial disclosures has now cost it one of its most high-profile MoUs.
Clarifying a few things, starting with the MoU.
— Siddharth Bhatia (@siddharthb_) March 24, 2026
Are you taking taxpayer money?
No. The MoU signed with the UP Government is structured as a public-private partnership. It does not involve any cost to the taxpayers of Uttar Pradesh. On the contrary, it brings investment into the…
For the Yogi Adityanath government, the episode is likely to become a case study in how social media scrutiny and questions around transparency norms can rapidly reshape high-value AI investment in Uttar Pradesh. It has also prompted a public recommitment to robust due diligence, especially when signing headline-grabbing MoUs with young technology startups.
