Union home ministry officials denied on Monday plans to allow Britain's West Midlands police to establish a post in Srinagar in Jammu and Kashmir.
A report in The Sunday Telegraph said the Birmingham-based West Midlands police were spending so much money sending teams to chase fugitives in Kashmir that it had been decided to set up a sub-station in Srinagar.
The newspaper said the annual cost of running the Srinagar station, to be jointly manned by British and Indian police officers, had been estimated at £200,000.
A spokesman at the Indian high commission in London described the report as "totally absurd."
"No British government agency has taken up this matter formally with us and frankly we find the whole proposition rather absurd," he said.
In Delhi, a source close to one of the ministers of state for home said the government has no such proposal under consideration.
"The report is baseless and mischievous. We have no such proposal with the home ministry to allow the British police to set up a station in Srinagar. To the best of my knowledge such a proposal has never been mentioned at any meeting in the home ministry. We are trying to find out the provocation for putting out such report by the British newspaper," he said.
Midlands has a population of over 500,000 Mirpuris, who originally hail from Pakistan-occupied Kashmir.
Reacting sharply to The Sunday Telegraph report, senior Bharatiya Janata Party leader J P Mathur said there is no question of allowing foreign police presence in Kashmir.
"I think someone has deliberately tried to project the things in a wrong manner," he said. "Mirpuris live in Pakistan-occupied Kashmir. If at all the Midlands police is thinking of opening a police station, they should do so in that region."
However, some security experts pointed out that the government had denied it was going to allow the Federal Bureau of Investigation to open an office in India a few years ago, eventually giving into American pressure.
"The same thing can happen even now," said a police officer who has served in Jammu and Kashmir.
The Sunday Telegraph report said the Midlands police planned to open a 14-member post in Srinagar.
The British policemen would not be armed and would be accompanied by Indian officers during raids to catch fugitives.
The British Foreign Office has not commented on the report, but The Sunday Telegraph quoted a Birmingham-based police officer of South Asian origin, Sergeant Asghar Shah, as saying that a British police station in Srinagar would be immensely helpful in tackling murders and financial crimes committed in the UK but linked to the 500,000 people of Kashmiri origin who have settled in the UK.
Shah said a West Midlands police detective had visited Kashmir three or four times already this year, costing his force £5,000 per visit.
Detective Superintendent Alan Betts, who has also been to Kashmir twice on the trail of a wanted man, is quoted as supporting a British police presence in Srinagar, saying: 'Personally, I think it would be a benefit. There are no British police officers in India. I would support this because it would give much better liaison between the two countries. There would be benefits and savings.'