MUMBAI, May 18 (Reuters) - Shareholders in Nestle India have rejected a company proposal to increase royalty payments to its Swiss parent Nestle, the company said late on Friday.

The motion called for the royalty paid to its parent to climb to 5.25% of net sales, net of taxes, compared to the current level of 4.5%. The increase was proposed at a rate of 0.15% per annum.

About 70.8% of public shareholders voted against the increase, a filing showed.

Under Indian regulations, the potential change would be classified as a related party transaction, which means that controlling shareholders were not allowed to vote.

The company did not say whether it intends to review the proposal. (Reporting by Ira Dugal; Editing by Edwina Gibbs)