The Uttar Pradesh government has cancelled a ₹25,000 crore memorandum of understanding (MoU) with artificial intelligence (AI) startup Puch AI amid criticism over the company's credentials.
The chief minister Yogi Adityanath-led UP government said the decision to cancel the MoU - signed on March 23 - was reached after a review of the agreement as per the standard protocols. Necessary details as per SOP were sought from the investor, but they failed to provide them timely, the state government said.
Due diligence showed lack of net worth and credible financial linkages for the project's scale, the state government said.
“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,” the UP government said through X handle of Invest UP, the newly created investment promotion and facilitation agency of the state government.
{{/usCountry}}“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,” the UP government said through X handle of Invest UP, the newly created investment promotion and facilitation agency of the state government.
{{/usCountry}}The MoU has been cancelled in the interest of transparency and highest level of probity in governance, the state government added
The MoU signed with Puch AI had drawn sharp criticism over the company’s credentials, prompting clarifications from both sides and a defined due diligence process from the state’s investment arm.
What is Puch AI
Founded roughly a year ago by Siddharth Bhatia and Arjit Jain, Puch AI offers a voice-first AI service via WhatsApp. Critics in the tech community dismissed the product as a “wrapper” built atop existing AI models, pointing specifically to Google’s Gemma family, HT earlier reported.
Bhatia has earlier acknowledged the company does not have its own foundational model, but said it has built its infrastructure on open-source models tailored for Indian users, rather than relying on commercial APIs from firms such as OpenAI or Anthropic.
Bhatia, also the CEO of the company, had earlier said the company is “well-funded” and not bootstrapped, while declining to share financial details. On the investment itself, he confirmed the structure 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 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,” an earlier HT report quoted him as saying.