Jain was arrested by CBI from Gurgaon and was flown to Hyderabad on August 12 and was remanded to four days judicial custody by 23rd Metropolitan Magistrate K Surya Rao.
The judge rejected the bail petition filed by Jain's counsel on health grounds and allowed CBI to take him into its custody following completion of his judicial remand.
The CBI, investigating into payment of Rs 11.7 crore to a Delhi-based firm 'Vashista Wahan' by Andhra Pradesh government, urged 10 days custody of Jain to conduct further probe.
The CBI had last week registered a case against officials of the private firm and other unknown persons in which it had alleged that the state government had released Rs 11.7 crore (equivalent to two million Euro) for a joint venture car manufacturing project.
The Volkswagon case sparked off a major political controversy in the state prompting the Chief Minister Y S Rajasekhara Reddy to call for a CBI probe besides shifting the portfolio of Industries Minister B Satyanarayana.