Peugeot will consider exporting right hand drive cars from India some time after the planned 2014 launch of the first locally-made 508 model, adapted to suit the local market in terms of quality, comfort and handling, a spokesman has said.

"The possibility, perhaps, of exporting right-hand drive cars" will be studied, Marc Bocque told AFP.

"For us, India will be a key market. It's very promising. It will be by 2020 the biggest right-hand drive market in the world and probably the third-biggest market if you take all kinds of vehicles by 2020."

Local publication Business Standard said PSA could export up to 25% of Indian output.

PSA Peugeot Citroen on Thursday signalled its return to India, announcing a new assembly plant in the west of the country as part of wider plans to sell more cars outside Europe.

Boque said the company was now better placed to gain a foothold in India than in the 1990s, when it embarked on a joint venture with the domestic Premier Automobiles that was plagued by labour issues.

"We're coming alone. That's the first point," he told AFP. "Otherwise, since then we have gained huge experience in the international market. We have developed in Eastern Europe, Russia and China.

"Our experience is much different from what it was at the time. I believe this will certainly be a strong asset for our future presence (in India)."

More favourable conditions for foreign firms in India than in the 1990s, when the country's closed economy first opened up to outside competition, will also help, he added.

Peugeot aims to sell at least half of its cars outside Europe by 2015. In the first quarter of the current financial year, 44% of sales were outside the continent, the company said.

Industry data showed Indian car sales slid almost 16% year-on-year in July, their biggest drop in nearly three years, as steeper borrowing costs due to interest rates hikes and inflation kept buyers out of the showrooms.

Rates of growth are still forecast to be 10 to 12 percent - second only to China - and Peugeot said it is banking on the situation being temporary.

"We have seen a slow down," admitted Bocque. "But we don't believe at all that it will be a long-term phenomenon."

Ford in July announced it was to invest US$1bn in a new assembly and engine plant, also in Sanand, 40km (25 miles) from the state capital, Ahmedabad. It already has a factory which export some models, notably the Figo, to markets such as South Africa, and also ships engines overseas. India's Tata Motors makes the world's cheapest car, the Nano, in Sanand, and the country's Japanese-controlled Maruti Suzuki, which has two factories in northern Haryana state, has also been linked with a move there.

Other European manufacturers, like Germany's BMW and Volkswagen, already have a presence in India, with production units near Pune, some 100km (60 miles) east of Mumbai.

Nissan and Hyundai also have plants in India and export widely, primarily to Europe.

Bocque said Gujarat's location near target markets in northern and western India, plus the state government's offer of land, infrastructure and support saw it chosen over alternative locations in southern Tamil Nadu and Andhra Pradesh.