Volkswagen is considering building a car factory in India, but said it had yet to make a final decision.
VW is looking to boost sales in India
The German giant said it was studying the possibility of opening an assembly plant in the country, but that it remained only a "potential" idea.
Its comments came after the industry minister of India's Andhra Pradesh state said a team of VW officials were due to visit to discuss the plans.
B. Satyanarayana said he expected VW to co-sign a memorandum of agreement.
Several foreign carmakers, including Hyundai, Toyota, Suzuki and Ford, already have Indian production facilities to meet demand for automobiles in Asia's fourth-largest economy.
VW's proposed plant would be set up in the port city of Visakhapatnam on India's eastern coast.
An Andhra Pradesh official added that VW had already approved a factory site measuring 250 acres.