Indian opposition MPs have raised concerns about using state funds to bankroll the Adani Group's Carmichael mine project in western Queensland, which they say is not viable.

During Indian prime minister Narendra Modi's maiden visit to Australia last month, Adani signed a MOU with the State Bank of India (SBI) for a $1 billion loan to fund the project in Queensland's Galilee Basin.

The Adani Group's Carmichael mine, rail and port project is worth about $16 billion and promises to create tens of thousands of jobs in Queensland's west.

But economic analysts said the project would only be viable if coal was at $100 a tonne - currently it is worth about $70 and showing no sign of rising.

Indian opposition MP Derek O'Brien raised the issue in the upper house of India's parliament last week, saying at least five international banks had refused to fund the project.

"Our understanding is these banks refused the loan, so our serious concern is why a $1 billion loan was given by SBI, knowing full well that these five banks have refused," he said.

The Adani Group believes the project is viable and wants it up and running by 2017, but India's coal minister said last month he hoped to stop imports of thermal coal within three years as domestic production stepped up.

"Two thirds of the produce of Carmichael will be imported back into India, so one of them is not talking the truth, speaking the truth. Because if India wants to reduce imports and two thirds of the capacity from the Australian mine is going to be imported back into India, it just doesn't add up," Mr O'Brien said.

Concerns over Adani links to Modi

Concerns have also been raised over prime minister Modi's ties to Adani, the company behind the mine.

Over the past decade, Adani has prospered in the state of Gujurat, where Mr Modi was chief minister.

The company's share price almost doubled as it became apparent Mr Modi would win the May election in a landslide.

Mr O'Brien said there were clear links between Mr Modi's Hindu Bharatiya Janata Party and the Adani group.

"There is enough to suggest there is a cosy understanding and that is why this loan was approved, not taking into consideration the facts which were on the table," Mr O'Brien said.

The company's debt has risen substantially in recent years, much of it short-term debt.

Public interest lawyer Prashant Bhushan said recovering the loan may not be easy.

"When they can only recover it from the assets of Adani, but you see we don't know. The total loans outstanding from the Adani group are in billions of dollars to various banks," Mr Bhushan said.

SBI's chairman has reportedly said the loan was only at an MOU stage, and that only allowed the bank access to details of the venture.

Mr O'Brien said parliament would be watching the negotiations closely.

"We don't want to oppose for the sake of opposing, but in the upper house of Indian parliament it's my party along with a group of other parties who have larger numbers than the ruling right wing BJP, so we are going to do all it takes to keep a very very close eye on this," he said.