India has rejected the BYD proposal to build a US$1bn factory with Hyderabad-based Megha Engineering and Infrastructure, the Economic Times reported.

BYD had earlier submitted the investment proposal to build electric cars and batteries, noted Reuters, citing the local paper's report.

The news agency had not been able to independently verify the Economic Times' report.

India's Department of Commerce, Department for Promotion of Industry and Internal Trade (DPIIT) had asked for opinions from other departments on the investment proposal, the local newspaper report said.

"Security concerns with respect to Chinese investments in India were flagged during the deliberations," the report quoted an Indian official as saying.