Tata Motors, whose cheap car plant has been dogged by protests, is to hold talks about making the vehicle in Karnataka, an official close to developments said on Wednesday.
A senior team from Tata was due to meet Thursday with BS Yeddyurappa, the Chief Minister of Karnataka, to discuss shifting the making of the Nano from West Bengal, the official, who did not want to be named, told AFP.
The planned meeting follows fresh protests on Tuesday outside the unfinished factory in West Bengal, where the world's cheapest car -Nano, which will retail at $2,260 was planned to be made.
Tata Motors has received a slew of invitations from Karnataka and other Indian states to relocate the plant after warning in August that it would close the West Bengal factory if farmers' demonstrations kept up.
A spokesman for Tata Motors, India's largest vehicle maker, declined to comment.
The protesters, who have demanded return of land acquired for the plant, gathered as the site in Singur town on Tuesday, more than a week after they had called off demonstrations.
The protesters rejected a government land offer, saying they wanted back more property.
Led by the regional Trinamool Congress party, the protesters are insisting on the return of 300 acres (120 hectares) within the 1,000-acre-plant site.
But the government has offered to return 70 acres and a rehabilitation package for people who lost their land.
A company official said some farmers, whose land was acquired by the state government for the plant, were taking the new compensation package.
The plant is 90 per cent complete and Tata Motors had said it hoped to launch the Nano in October in time for the big-spending Hindu festival season.
Shifting the plant would delay any mass rollout for months and add to the costs of production, analysts say.
Work building the Nano factory has been suspended for weeks since protesters threatened violence against construction workers.