UP Govt Cancels ₹25,000 Crore MoU With Puch AI After Due Diligence Shows Financial Red Flags

The Uttar Pradesh government has cancelled its Rs. 25,000 crore Memorandum of Understanding with Bengaluru-based startup Puch AI, just days after the agreement was signed, citing the investor's failure to meet due diligence requirements. This comes after the government faced severe backlash from critics upon announcing the MoU, pointing to Puch AI's small team and lack of any infrastructure track record as fundamental red flags for a commitment of this scale.

Invest UP announces cancellation of MoU

In a post on X, Invest UP, the state's investment promotion body, confirmed the development, stating that the MoU was reviewed as per standard State Government protocols. "Necessary details as per SOP were sought from the investor, but they failed to provide them timely," the post read. Due diligence further revealed a lack of net worth and credible financial linkages commensurate with the project's scale. The body added that no rights or obligations remain under the cancelled agreement, and that the decision reflects the "highest level of probity in governance" that is core to the Yogi Adityanath-led government.

A deal that was always under scrutiny

The MoU had barely been announced before it drew fierce backlash online. Puch AI's annual revenue stood at just Rs 42.9 lakh as of March 31, 2025, making the Rs 25,000 crore MoU nearly 6,000 times larger than its annual earnings. The company has raised no external funding to date, and critics pointed to its small team and lack of infrastructure track record as fundamental red flags for a commitment of this scale.

Who Is Puch AI?

Puch AI is a Bengaluru-based startup founded in 2025 by Siddharth Bhatia and Arjit Jain, focused on making AI accessible to everyday Indians through WhatsApp and voice calls, offering services in regional languages. The company's founder Bhatia previously made headlines when he announced a $50 billion unsolicited offer to acquire Perplexity AI and Google Chrome, widely read as a publicity stunt.

Yogi Adityanath's damage control

After the initial backlash, CM Yogi Adityanath had clarified that the MoU was a "preliminary step" and non-binding, adding that any further progress would be subject to detailed evaluation of the investor's proposal. The cancellation now makes that position official.

Published on: Friday, March 27, 2026, 10:52 AM IST