Alibaba Marks India Entry

Alibaba, the world's largest e-commerce company, is leading an investment round of between Rs.1,350 crore and Rs.1,700 crore in the online retail marketplace of Paytm, marking the formal entry of the Chinese major into a market where it will now compete with US' Amazon and India's Flipkart.
Alipay, the payments affiliate of Alibaba, and investment firm SAIF Partners have also participated in the deal which is expected to value the online marketplace, spun out of parent company One97 Communications at over $1billion.

Alibaba was expected to begin business in India as Tmall, its business-to-consumer brand in China, in order to differentiate its business from Paytm's digital payment brand. But the online marketplace will now continue under the Paytm brand.

Experts are of the view that Alibaba has an advantage in the business-to-business sector where there aren't too many competitors.

The e-commerce services business, which includes ticketing and offline payments at petrol pumps, will continue under One97, founded by internet entrepreneur Vijay Shekhar Sharma.

Paytm also transferred its wallet licence to the payments bank unit last year, which is expected to launch operations in the next few months. Sharma owns a 51% stake in the payments bank while the rest is owned by One97 Communications.

The latest deal, the first significant transaction in the Indian ecommerce industry this year, is expected to lead to a shakeout in the sector, which has witnessed a tough battle between Flipkart, Amazon and Snapdeal.

Amazon has picked up marketshare with its aggressive spending even though the pace of growth has slowed.

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