UP Pulls Plug on Puch AI Deal Over Financial Gaps
The state cancelled the ₹25,000-crore pact days after signing it, saying due diligence found insufficient net worth and credible financial backing for a project of that scale.
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The Uttar Pradesh state government cancelled a ₹25,000-crore ($2.6 billion) memorandum of understanding (MoU) with Bengaluru-based startup Puch AI, just days after signing it, citing concerns over the company’s financial capacity to execute the project.
The agreement, signed on March 23, was positioned as a major push to build AI infrastructure in the state. But a subsequent review by authorities found that the startup did not meet the financial thresholds required for a project of that scale.
“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 linkages for the project’s scale. On directions of the State Government, the MoU is cancelled effective today. No rights or obligations remain,” said the UP government in a post on X.
Officials said the decision was taken “in the interest of transparency and highest level of probity in governance.”
The now-scrapped proposal had outlined an ambitious plan: setting up AI parks backed by large data center infrastructure, creating “AI Commons” for public and governance use, and launching an AI-focused university to train students and professionals.
The abrupt cancellation comes amid growing scrutiny over headline-grabbing investment announcements in India’s AI sector, especially those involving early-stage companies with limited public financial disclosures.
Chief Minister Yogi Adityanath sought to downplay the development, noting that such agreements are non-binding. “An MoU by Invest UP is a preliminary step before detailed due diligence and project evaluation gets done,” he said, adding that the deal was only meant to explore potential opportunities in AI.
Meanwhile, Puch AI defended itself, with co-founder Siddharth Bhatia stating that no taxpayer money was committed and that the project would have been executed in phases with backing from external investors. He also pushed back on claims about the company’s financials, saying widely cited revenue figures referred to a different entity.
