I'm planning to install a grille on a house entrance door. I requested for the hinges to put inside and the door to swing outward. The grille person keeps telling me it cannot be done. Is he correct?

On a timber door and frame, the hinges are installed flush with the surface so that the gap between the door & frame is very small.

For the MS hollow sections frames. Thus there are 2 options.
1. install the hinges on the metal surface by tack welds. Thus the gap between the door & frame will be slightly bigger.
2. cut slots into the hollow sections and tack weld from the back as what's being done to those metal bedroom door frame that you see in some of the houses. These are mostly done in factories by machines.

As a compromise, and having a smaller gap between the MS grille door and frame, you use this type hinge which will reduce the gap between the door & frame.

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Most grille maker will say this & that cannot be done. Just because they have not done so themselves, does not mean cannot be done. 
You buy the hinges and pass to them to install. Problem solved.