India has rejected Chinese automaker BYD's request to set up a joint venture to produce electric vehicles and batteries in the country, estimated to be worth about $1 billion, in partnership with local company Megha Engineering.

According to Reuters, India's Department of Commerce and other government agencies rejected the application during discussions on the project, citing security concerns.

"During the discussions, security concerns about Chinese investment in India were noted," an Indian official said.

BYD, together with private company Megha Engineering and Infrastructures, submitted a proposal to Indian regulators to establish a joint venture for the production of electric vehicles last month.

The long-term plan was to create a full line of BYD electric vehicles, ranging from hatchbacks to luxury models.

According to the publication, today BYD is the world's largest manufacturer of electric and hybrid vehicles, while India remains the third largest car market in the world.

At the same time, BYD has already made an investment of $200 million in India, where it successfully sells its Atto 3 and e6 EV electric cars for corporate fleets. It is also planning to launch its luxury model Seal this year.

It is worth noting that the Chinese automaker BYD intends to open a plant in Vietnam to produce automotive parts in order to export components to a plant in neighboring Thailand.