Indian tycoon and former member of parliament Vijay Mallya has been arrested in London following an extradition request from India where he is accused of fraud, British police said.

Mallya, who co-owns the Formula One team Force India, appeared in a London court on Tuesday and was granted bail.

The Indian businessman has been pursued by authorities over unpaid loans tied to his defunct Kingfisher Airlines.

Malya secretly fled India in March 2016 owing more than $1bn after defaulting on loan payments to state-owned banks and allegedly misusing the funds.

India submitted an extradition request to Britain in early February after investigators demanded that the 61-year-old be brought home to face charges.

Mallya has repeatedly dismissed the charges against him and defended himself in messages from his personal Twitter account.

Usual Indian media hype. Extradition hearing in Court started today as expected. — Vijay Mallya (@TheVijayMallya) April 18, 2017

Scotland Yard arrested Mallya, Indian television channel CNN News18 said, adding that a team of Indian law enforcement officials would visit London to begin work on his extradition.

India's top brewer, United Breweries, part-owned by global giant Heineken, this year asked Mallya, its non-executive chairman, to step down from the board, following a regulatory order.

India's capital markets regulator has also barred Mallya from participating in the securities market for having allegedly diverted funds from whisky maker United Spirits.

'Criminals won't be spared'

Santosh Gangwar, India's junior finance minister, said the government would do everything in its power to bring Mallya to justice.

"We will not spare anyone who is within the ambit of law. Criminals will not be spared," Gangwar told reporters in New Delhi after the arrest.

"We will definitely work to bring him back to the country."

Mallya was once the owner of the Indian Premier League cricket team Royal Challengers Bangalore and still owns the Barbados Tridents in the Caribbean Premier League.

Last year, Samirbhai Vinubhai Patel became the first Indian to be extradited on the basis of the India-UK Extradition Treaty of 1993, according to India's The Hindu newspaper.

He was wanted by India over the Gujarat riots that took place in 2002.