The star had been offered the amount to make a ten-minute runway appearance in Kochi, reports Mid Day.
Kaif has apparently decided not to take up the offer, as she did not want to delay the UK shooting schedule of Yash Chopra's upcoming London Ishq.
The 27-year-old would have earned over £12,000 per minute for her appearance at the event in Kerala on March 25.
The YRF crew are reportedly planning to start work on a large-scale traditional Indian party sequence at an undisclosed location in the UK on March 22.
Kaif also has allocated filming dates opposite Salman Khan on a second project for the production house, Ek Tha Tiger.
London Ishq is scheduled to release on November 16.