MELBOURNE: An Indian man who said thugs in Australia set him on fire made up the story after burning himself as he tried to torch his car to make an insurance claim, police alleged Wednesday.

Jaspreet Singh suffered burns to 15 percent of his body in the incident in Melbourne, which came amid heightened fears about the safety of Indians in the city after the stabbing murder of a Punjab man a week earlier.

"Police inquiries have led us to believe that Mr. Singh is in some financial difficulty," Detective Senior Constable Danielle O'Keefe told an out-of-sessions hearing in Melbourne.

"And that he intended to sell his car but instead stood to gain 11,000 dollars (9,750 US) from an insurance claim out of this particular incident."

Singh, 29, has been charged with making a false report to police and criminal damage with a view to gaining financial advantage over the incident, which fuelled anger in India after a string of attacks on Indians in Australia.

Singh initially told police that he was parking his car late on January 8 when he was approached by a group of four men, who doused him in petrol and set him alight.

But Wednesday's hearing was told he accidentally burned himself as he tried to torch his 2003 Ford Futura.

Arson and medical experts had concluded that Singh's injuries, and the damage to his car and clothes, did not match his story, O'Keefe said.

Singh denied all the allegations and was granted bail to appear before Melbourne Magistrates' Court on March 15.