France's largest car maker PSA Peugeot Citroen is learnt to have held talks with some state governments for land to set up a manufacturing plant.
The company plans an entry through a 100 per cent India subsidiary.
The French company, which has expertise in making stylish compact cars and sedans that are mostly sold in the European market is expected to make an announcement before the end of the year.
A senior company executive had said an announcement could be made in "a few weeks".
It had held discussions with Japan's Mitsubishi Motors for a joint manufacturing programme, which failed to materialise.
Both companies have a joint plant in Russia. Mitsubishi owns a plant in Chennai where it makes SUVs and sedans.