PSA Peugeot Citroen (PEUGY), France's biggest carmaker, may build a factory in India to tap growing demand for cars in the country, Bloomberg News reported.

The company may spend around 700 million euros ($881 million) on the factory in the southern state of Andhra Pradesh, Bloomberg News said without naming its sources. The factory would have the capacity to produce 100,000 cars a year.

"There is enough space for manufacturers to grow as the Indian economy expands and aspirations rise," Ammar Master, a Bangkok-based analyst at J.D. Power & Associates told Bloomberg News. "It is a good thing if PSA enters the market as it's the last major global automaker left to come to India."

Peugeot executives will decide on the project later this month.

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