Chinese e-commerce giant Alibaba is planning to enter India this year and for a possible partnership, it has approached Tata Sons. It will take two quarters for Alibaba to finalise a joint venture partner.
The company said it is evaluating all opportunities to build the business organically or look at any other thing that might come along.
Apart from initial deal contours beyond online retail, the discussion with Tatas would have also covered areas like logistics, offline stores and omni-channel to support Alibaba’s core e-commerce business
FDI is still not allowed in the e-commerce sector but there are no restrictions on foreign funds in online marketplaces. Morgan Stanley estimates the total Indian internet market size will grow to $159 billion by 2020 to emerge as the fastest-growing e-commerce market globally, from $16 billion now.
Tata Group has been a launch pad for several marquee consumer brands in the country. Retail arm Trent has two major partnerships with the world’s largest apparel firm Inditex to sell its Zara brand and an equal joint venture with UK’s Tesco, the world’s second largest retailer. The biggest coffee chain Starbucks has entered India through an alliance with Tata Global Beverages.
Paytm to help Alibaba establish India presence
Paytm is considering a plan to spin off its online marketplace to allow Alibaba to establish a direct presence in the world’s fastest growing e-commerce market, three people aware of the developments told The Economic Times.
“The Indian company may spin off its marketplace business, which will have Alibaba as a majority stakeholder in that company and allow Alibaba to organically expand in India,” this person said, adding that the Indian firm’s payments bank, digital wallet and online-to-offline business categories such as bus ticketing and travel would likely be run as a separate business.
Paytm is in talks with Alibaba Group for an additional investment of Rs 1,990 – Rs 2,655 crore, a person directly aware of the negotiations was quoted by The Economic Times as saying, while declining to disclose the valuation at which the money would be raised.
Alibaba and Paytm declined to comment on what they said was market speculation.