This is described in the game as:

Switch while aiming. Underbarrel weight affects handling.

You’ll find this in western Remanzo in the village of Poco. The accessory case is in an open building or garage on the southern side of the village.

Approaching from the south, there are some cartel on different floors of the nearby buildings which you could sneak past or easily take down to clear the area.

When equipping, you must have first unlocked the GL skill under the Weapon category in your skill tree. This will grant you the Std Grenade Launcher, and allow you to equip the M203.

The M203 is a considerable improvement on the standard grenade launcher, holding five rounds as standard and reloading much faster, it kicks ass and is a very worthwhile upgrade! This is one of my top accessory recommendations, and my others are listed in the description below the video.