AI project: UP Govt scraps INR 25,000 cr MoU with Bengaluru-based startup
The Uttar Pradesh Government has cancelled a proposed INR 25,000 crore Memorandum of Understanding (MoU) signed with Bengaluru-based startup Puch AI for developing artificial intelligence infrastructure in the state, citing lack of financial credibility on the part of the firm.
In a statement issued on the official handle of InvestUP on Thursday, the Government said the decision was taken after a review conducted as per standard operating procedures revealed that the company did not possess the requisite net worth or credible financial linkages to execute a project of such magnitude.
“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.It added that the agreement stands cancelled with immediate effect and no rights or obligations remain between the parties.
The Government emphasised that the move was taken in the interest of transparency and maintaining high standards of probity in governance.The now-scrapped MoU, announced earlier this week, was projected as a major initiative to position Uttar Pradesh as a hub for emerging technologies.Chief Minister Yogi Adityanath had on March 23 said the proposed investment would facilitate the establishment of AI Parks, large-scale data center infrastructure, AI Commons, and an AI University to the state.
The AI Commons was proposed for facilitating governance applications while the AI university was aimed at skilling youth.However, the announcement triggered criticism on social media, with several users questioning the startup’s capacity to undertake such a large-scale project.
Responding to the concerns, Adityanath had clarified in a post on X on March 24 that MoUs signed through Invest UP are non-binding and serve only as preliminary steps before detailed due-diligence and evaluation. He said any further approval or permission is subject to thorough assessment of the investor’s proposal, and agreements would be terminated if the investor fails to meet the required criteria.
The official Invest UP handle also reiterated that any prospective investor falling short during evaluation would automatically face termination of the MoU.Reacting to the development, Samajwadi Party President Akhilesh Yadav on Thursday alleged that the episode exposed the state Government, and demanded a comprehensive probe into all MoUs signed by it.
“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 relying on “event-based politics and propaganda”.
