Alibaba
If the alliance with Snapdeal helps Alibaba enter India’s booming online retail space, it will be competing directly with Flipkart and Amazon. Reuters

China’s Alibaba is in talks with Snapdeal, a New Delhi-based online retailer, a local news report said Thursday, citing two people familiar with the matter. The e-commerce giant is looking to enter India where the online retail business has exploded in recent months.

Alibaba, which is preparing for what could be the technology industry’s biggest initial public offering, is discussing a potential investment in Snapdeal, The Economic Times, or ET, a local news publication, reported.

“India is a huge opportunity for Alibaba,” one of the sources told ET. “Eventually it will look at entering the business-to-consumer space in India and talks are on.”

The alliance with Snapdeal is expected to pave the way for the Chinese company's entry into India’s booming online retail space. If the deal succeeds, Alibaba will compete directly with the likes of Flipkart, the country’s largest e-commerce company, and Amazon, which recently announced a plan to invest $2 billion as part of its expansion plans for India.

Snapdeal, which recently received investments from Ratan Tata, chairman emeritus of Tata Sons, the holding company of the $103 billion Tata Group, is also getting attention from Japan's largest e-commerce company Rakuten and telecommunications firm SoftBank, according to the ET report.

In 2014, Snapdeal has so far raised more than $233 million, not counting the latest investment by Tata. The company, which is reportedly growing at an annual rate of 600 percent and recently crossed $1 billion in sales, is also adding new products from more than 50,000 vendors to sell through its website.