The Uttar Pradesh government has abruptly terminated its ₹25,000 crore memorandum of understanding with Bengaluru-based AI startup Puch AI, just days after announcing the ambitious project to build AI parks, data centres and an AI university. Invest UP, the state’s investment promotion agency, cited the firm’s failure to provide required financial details and a lack of credible net worth or linkages for a venture of this scale.
Due Diligence Exposes Startup’s Limited Capacity
The MoU, signed on March 23, underwent standard protocol review where Puch AI did not furnish necessary SOP details in time. Due diligence confirmed the one-year-old startup lacked the financial muscle and track record to execute, prompting immediate cancellation with no remaining rights or obligations.
Chief Minister Yogi Adityanath had promoted the deal on X as positioning UP as an AI hub, but faced swift backlash over Puch AI’s credentials—a small team with no major infrastructure experience. Adityanath later clarified MoUs as non-binding exploratory steps subject to evaluation.
Puch AI Defends Vision, Blames Misinformation
Founder Siddharth Bhatia described the project as a phased public-private partnership backed by external investors, emphasising no government funds would be used. Citizens would gain free multilingual AI access via “AI Commons,” he posted on X.
Bhatia attributed scrutiny to a Google AI error confusing Puch AI with Pucho AI (₹42.9 lakh revenue), noting Puch’s figures are private. He did not respond to media queries post-cancellation.
Broader Questions on Tech MoU Scrutiny
The episode reignites debate on due diligence rigour in government-startup collaborations amid India’s AI push. Opposition alleged potential insider involvement; officials stressed transparency and probity as core governance principles.
For states chasing tech hubs, it underscores balancing ambition with validation—preliminary MoUs must evolve into vetted commitments. UP’s swift action preserves credibility while signalling caution in high-stakes AI infrastructure deals.
