Lucknow: The Uttar Pradesh government has scrapped a Rs 25,000-crore MoU with Bengaluru-based startup Puch AI, which was founded just last year, amid a social media backlash and Opposition questions over the nascent firm’s ability to handle such a high-value deal.
According to sources in the Chief Minister’s Office, Yogi Adityanath also directed Invest UP officials to strictly verify the credentials of startups before entering into high value MoUs in the future.
He also instructed senior officials to closely monitor social media to prevent similar controversies. Sources said the chief minister warned of strict action against officials if “such lapses” occur going forward.
According to the state’s investment department, the MoU signed 23 March was reviewed according to standard government protocols. During the process, necessary details were sought from the investor, but the company failed to furnish them within the stipulated time.
As per standard protocols laid by State Government, the MoU signed with Puch AI on 23 Mar 2026 was reviewed.
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…
— INVEST UP (@_InvestUP) March 26, 2026
Officials said that due diligence revealed a lack of adequate net worth and credible financial linkages commensurate with the scale of the proposed project.
“The Memorandum of Understanding has been cancelled in the interest of transparency and highest level of probity in governance, which are in the core of Government of Uttar Pradesh,” the UP Invest said in a post on X.
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Yogi’s tweet & the controversy
The controversy began Monday after Uttar Pradesh Chief Minister Yogi Adityanath announced on X that the state government had signed the Rs 25,000-crore MoU with Puch AI.
In his post, he outlined an ambitious plan to position Uttar Pradesh as an AI-driven hub, with proposals for AI parks, large-scale data centre infrastructure, an “AI Commons” platform for citizens, and a dedicated AI university.
New Uttar Pradesh is embracing the power of Artificial Intelligence.
A ₹25,000 Crore MoU with Puch AI will bring AI Parks, large-scale data center infrastructure, AI Commons, and an AI University to the state.
This initiative will strengthen governance, drive innovation, and…
— Yogi Adityanath (@myogiadityanath) March 23, 2026
However, within hours of the announcement, a community note was added to the post, claiming that the startup was less than a year old and had an annual revenue of under Rs 50 lakh, raising questions about its ability to execute a project of such magnitude.
The development quickly gained traction, with social media users and opposition leaders questioning the government’s choice of partner. Concerns intensified as it emerged that the company, founded in June 2025, had no publicly available financial track record to support a project of this scale.
Several opposition leaders, including Samajwadi Party chief Akhilesh Yadav, also raised questions on it.
MoU करने से पहले से AI से ही ‘पूछ’ के बारे में पूछ लिया होता।
अपने आस-पास के ऐसे ‘फ़ाइव परसेंटिया’ घूसखोर व ख़ुदगर्ज़ लोगों से बचना चाहिए जो आपकी अनभिज्ञता या अज्ञान का दुरुपयोग करते हैं। इससे आपकी AI (Artificial Image) मतलब ले-दे के बनाई गई ‘कृत्रिम छवि’ पर भी बहुत ख़राब…
— Akhilesh Yadav (@yadavakhilesh) March 25, 2026
Within 24 hours, Yogi Adityanath clarified on X that the MoU with Puch AI is non-binding, and merely a preliminary arrangement, and any further progress including permissions, approvals, or licences, will depend on a thorough evaluation of the investor’s proposal.
On the other hand, Puch AI Co-Founder Siddharth Bhatia also came up with a clarification on X where he mentioned that the MoU signed with the UP government is structured as a public-private partnership.
Clarifying a few things, starting with the MoU.
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…
— Siddharth Bhatia (@siddharthb_) March 24, 2026
It does not involve any cost to the taxpayers of Uttar Pradesh, he said. On the contrary, he added, it brings investment into the state.
“The project will be executed in phases, with support from external investment partners. We have not taken any money, any GPUs, or any other form of support from the Government. The only part of this MoU that involves citizens is that they’ll receive free access to AI, in their own language and through familiar interfaces, via AI Commons,” said Bhatia in his X post.
(Edited by Ajeet Tiwari)
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