The decision was described as "bizarre" in India, and has sparked angry demands for a diplomatic protest at the highest levels for treating the country as a "rogue nuclear state" less than a year after the Coalition government praised India's "impeccable record" of non-proliferation.

Australia has ratified a deal to sell Australian uranium to the south Asian giant.

Ananth SM, a 29-year-old aerospace engineer from southern India, won a scholarship to the University of Melbourne almost a year ago to study a PhD in fluid mechanics.

But after months of delay, Mr Ananth was finally told this week that he could not take he scholarship up. The Department of Foreign Affairs told him that Foreign Minister Julie Bishop had refused him entry to Australia because was "a person whose presence in Australia may be directly or indirectly associated with the proliferation of weapons of mass destruction".

The Department of Immigration was not swayed by Mr Ananth's appeal that his research was based on "freely available" mathematical models, and that he had "never been involved, even remotely, in any religious or political organisations that could spread some form of hatred."

"I'm really upset, I have worked hard to secure this offer," Mr Ananth told Fairfax on Wednesday. He said he was sure the rejection would have disastrous consequences for his career as it would "follow me wherever I go".

"My career is going to end before it gets started," he said.

University of Melbourne Professor Richard Sandberg of the Department of Mechanical Engineering said he was surprised Mr Ananth had been refused a visa, and he supervised other international students - including from India - carrying out similar research.

Professor Sandberg said he had offered Mr Ananth the scholarship because he made a strong application and was from a group of students who had done well at Cambridge University.

Prominent Indian MP Shashi Tharoor - chair of the country's External Affairs Committee of parliament - has blasted Australia's decision to refuse Mr Ananth a visa.

"How an Indian scholar could be subject to such a bizarre suspicion … is unacceptable since it clubs Indian nationals working in certain sectors with those of rogue nuclear states like North Korea and Pakistan," Dr Tharoor said.

The Immigration department did not answer questions directly on the case but said all visa applicants must meet relevant health, character and security checks, and the department may rely on information from "other agencies".

India is highly sensitive about nuclear technology, having never signed international nuclear safeguards, yet having gone ahead and built atomic weapons.

A bitter debate about the sale of uranium to India plagued Australia's ties with the country for a number of years before the Gillard Labor government eventually relented in 2012. Only last month, Australia formally backed India to join the global club of nuclear suppliers.

But Ian Hall, a Griffith University specialist on India foreign and security policy, told Fairfax Media from New Delhi that many local officials remembered Australia's longstanding refusal to sell uranium (yellowcake), and this latest case would damage ties.

"India argues that it has a right to develop a credible nuclear deterrent and that it has a spotless record in terms of non-proliferation, as it has never transferred related technologies to other countries," Professor Hall said.

It is not the first time Australia has barred Indian scientists, having banned two nuclear officials in 2008. However, it's the first time in what leaders of each country call an era of "strategic partnership".

Dr Tharoor said the visa rejection was not the act of a "friendly nation" and has written to India's External Affairs Minister Sushma Swaraj, warning the case has serious implications for relations with Australia.

Professor Sandberg said the proposed research was not involved in developing technology but had fundamental applications, including in aircraft engines or wind turbines for renewable energy.

Mr Ananth studied a masters degree at IIT Kanpur made applied for his visa to Australia in August 2015. He was told in a letter in June his visa was likely to be refused and given a chance to respond, which he did, only to receive a final rejection on Tuesday.

Mr Ananth told Fairfax he just wanted to go to a good overseas university and become an academic researcher. "The areas I have worked on are not at all related to the creation of weaponry," he said.