New Delhi (PTI): Europe's second largest automaker PSA Peugeot Citroen is scouting for a manufacturing location in Tamil Nadu and Andhra Pradesh, amid its Indian re-entry plans getting slowed down by the global downturn.

According to industry sources, the company, which conducted consumer clinics in October last year with market research firm IMIRB, is looking at bringing its hatchback 307 and sedan C5 in India.

It has already had discussions with the Automotive Research Association of India to understand the regulations and homologation (making the vehicles meet the Indian rules and norm) needs for its products, the sources said.

Company representatives have already met the government officials of Andhra Pradesh and Tamil Nadu in its quest for a location to set up its plant, they added.

With the segment in which it is present not economically viable to be launched through direct imports, it is understood that the company is looking at launching its cars only after having a manufacturing unit in India.

When contacted PSA Peugeot Citroen, Vice-President India Rajesh Nellore confirmed meeting officials from the Andhra Pradesh government to discuss investment opportunities, which he said "were preliminary in nature".

Nellore, however, said: "The global economic crisis has slowed the plans and that the company is strongly in favour of operations in India as and when conditions become favourable."

PSA Peugeot Citroen is no stranger to India having entered into a partnership with the erstwhile Premier family resulting in the joint venture Peugeot PAL India.

In 2001 it pulled out from the JV and is currently actively sourcing components from India. The firm had opened an office in Chennai in October 2008.