UP govt scraps Rs 25,000-cr MoU with Bengaluru-based startup over 'lack of credibility'

Lucknow: The Uttar Pradesh government has cancelled a proposed Rs 25,000 crore Memorandum of Understanding (MoU) with Bengaluru-based startup Puch AI to develop artificial intelligence infrastructure in the state, citing concerns over the company’s financial credibility.

In a statement posted by InvestUP on Thursday, the government said the decision followed a review conducted under standard operating procedures, which found that the firm lacked the required net worth and credible financial backing to execute a project of such scale.

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

The government added that the agreement stands cancelled with immediate effect, with no rights or obligations remaining between the two sides. It stressed that the move was taken to ensure transparency and uphold high standards of governance.

The now-scrapped MoU, announced earlier this week, had been pitched as a major step towards turning Uttar Pradesh into a hub for emerging technologies.

Chief Minister Yogi Adityanath had said on March 23 that the investment would enable the development of AI Parks, large-scale data centre infrastructure, AI Commons, and an AI University in the state. While the AI Commons was intended to support governance-related applications, the proposed university aimed to skill the youth in artificial intelligence.

However, the announcement drew criticism on social media, with several users questioning the startup’s ability to handle such a large-scale project.

Addressing the concerns, Adityanath had said in a post on X on March 24 that MoUs signed through Invest UP are non-binding and serve as preliminary agreements pending detailed evaluation. He added that approvals are subject to thorough scrutiny and that agreements would be terminated if investors fail to meet required criteria.

The Invest UP handle also reiterated that any investor failing the evaluation process would automatically face cancellation of the MoU.

Reacting to the development, Samajwadi Party chief Akhilesh Yadav alleged that the episode had exposed the state government and called for a comprehensive probe into all MoUs signed so far.

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