According to Sunday Times report, "The Indian conglomerate Tata has snubbed Lord Mandelson, the business secretary, rejecting a 10 million pound loan for a technical centre in the Midlands."
The report said the Tatas, owner of premium car brands Jaguar and Land Rover and steel maker Corus, has in the past few days told the government that it does not want the money.
"It has decided it can get better terms from commercial lenders," the newspaper said citing sources.
The money was awarded as part of the Automotive Assistance Programme (AAP), a scheme that was designed to help the car industry overcome the worst of the recession and foster investment in new technology.
The money was supposed to be used to develop an electric version of one of its existing models, the report added.