Around 200 children were orphaned and many more lost one parent when December's tsunami struck the district of Nagappattinam in Tamil Nadu state, the worst-affected region in India.
Children are encouraged to play to divert them from the trauma
The local administration has handled scores of queries from individuals and organisations wanting to adopt the children.
But fears of human trafficking have made the government tread with caution.
The emphasis now is on rehabilitating these children in the local communities.
Suryakala, a district social welfare officer in Nagappattinam, says many children they talked to preferred to remain here rather than move out of the area.
The local administration has asked those interested in adoption to send in applications. But they are in no hurry to move these children out.
The fury of the tsunami's waves has left a deep scar on most of these children.
If some lost their parents, many others were witness to the devastation and have been trying to cope with the trauma.
Spending time with other children in their age-group provides them with a diversion for a while. But only for a while.
A day-care centre run by a local church in Nagappattinam has around 40 children who have lost one of their parents.
Rosemary, a local teacher, says: "These children are traumatised. Some have become irritable and disinterested."
Many youngsters have become "irritable and disinterested"
Poongkulali plays in the centre's over-two-year-olds group, where her mother drops her every morning.
Ask her about the tsunami and tears well in her eyes. "There was water everywhere... my father is no more," she says.
A few more questions and she looked dazed.
Mrs Ratham is another teacher who is trying to help children get over the trauma of the tsunami.
"We make the children spend more time playing and singing so as to divert their attention from the tragedy. It has been difficult to get the children to concentrate even on playing," she says.
"Leave them for a while and they leave the play area to huddle in a corner."
Around 60 children have been put up in an orphanage run by the Zion Church in Nagappattinam.
Parvathi lost her parents but has returned to the school to take her examinations.
She visits her relatives once a month and says she prefers to stay in Nagappattinam.
Local charities and social activists have lobbied hard with the government not to "give away" these children for adoption.
Aftab, a young activist, says he learned a lot from the aftermath of the Gujarat earthquake in 2000.
He says that in the past two months there have been several instances of representatives of organisations trying to "forcibly" take away orphans.
Nagappattinam was one of India's worst-hit areas
"The local community objected and expressed its willingness to take care of such children," says Aftab.
"None of these children want to be moved out," he says.
The local administration, Aftab says, is still not clear about what it wants to do with them.
He has met representatives of different villages who back the idea not to move them out.
"Why should these children be sent to orphanages and homes far from here?" he asks.
Efforts by individuals like Aftab seem to have had an impact.
The local administrator's office has decided against any hasty decision.
One official summed up the dilemma faced by the government: "The issue of children is a delicate matter in any community... one wrong step and we will invite the wrath of the people."