LUCKNOW: Days after signing a Rs 25,000 crore Memorandum of Understanding (MoU) with Puch AI, and following social media posts raising questions about the firm’s capacity to enter into such a large agreement, the Yogi government cancelled the MoU. A review revealed a “lack of adequate net worth” of the company and “absence of credible financial linkages.”
The decision to cancel the agreement, originally signed on March 23, was taken on Thursday, while CM Yogi had issued a clarification on Tuesday emphasizing that the MoU was only a preliminary step and not a final commitment.
On Monday, the CM had highlighted the scale and ambition of the proposed investment through a post on the microblogging site X. However, several users on X quickly added a community note to the post, questioning the startup’s capacity, noting its small size, and doubting its execution capability.
According to the authorities, the decision to scrap the MoU was made after a standard protocol review of the agreement.
“Necessary details, as per the standard operating protocol, were sought from the investor, but they failed to provide them within the stipulated time. The due diligence process further revealed a lack of adequate net worth and absence of credible financial linkages required for a project of this scale, leading to the decision to cancel the MoU,” a statement issued by the UP government read.
It added, “On the directions of the state government, the MoU stands cancelled with immediate effect. No rights or obligations remain.” The statement also emphasized that the move was taken in the interest of transparency and to maintain the highest standards of probity in governance.
The MoU, which has now been cancelled, had been projected as a major investment proposal in the AI space, aligning with the state’s push to position itself as a hub for emerging technologies. However, officials maintained that adherence to due process remained paramount, and any proposal failing to meet established norms would not be pursued.
The government reiterated that while it is open to investments, projects must meet financial credibility and transparency benchmarks before being approved or implemented.
On Tuesday, Siddharth Bharia, co-founder of Puch AI, which describes itself as “India’s first AI assistant,” posted: “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 state. The project will be executed in phases, with support from external investment partners.”