A worker at Indian e-commerce company Snapdeal.com scans a barcode on a box after it was packed at the company's warehouse in New Delhi April 20, 2015. Reuters/Anindito Mukherjee

Alibaba Group Holding Ltd. has partnered with contract manufacturer Foxconn Technology Co. Ltd. in a return to talks for a stake in Indian online shopping business Snapdeal, Economic Times reported on Friday.

The return looks to signify Alibaba’s intent to accelerate its India plans. The world’s largest online shopping company has already picked up a stake in mobile payments company One97 Communications and is reportedly in talks for a piece of local smartphone vendor Micromax Informatics Ltd.

Alibaba and Foxconn, which wants to diversify beyond making smartphones, could lead an investment of as much as $1 billion, valuing Snapdeal at up to $7 billion. SoftBank Corp., Snapdeal’s largest shareholder, may also participate in the new funding, the paper reported, citing persons familiar with the discussions.

An increasing number of Chinese companies are looking at expansion into India, where a booming smartphone market and rising Internet access are facilitating rapid growth of startups, online commerce and new Internet-based services. The companies, and their investors, are looking to be early movers in a market that could one day rival China.

In addition to SoftBank, which invested in Jasper Infotech Pvt. Ltd., Snapdeal’s parent, last year, the Indian e-commerce company is backed by eBay Inc. and other early-stage investors such as Kalaari Capital. Some early investors might be looking to exit by selling their stake to the Alibaba-led group, the paper said.

Delhi’s Snapdeal is fighting primarily for the business of some 50 million middle class households across India, although that number could be rising as smartphone penetration increases. Rivals include Flipkart and Amazon.com Inc.’s Indian operations. India has a billion wireless subscribers but only one in six of them owns a smartphone. Smartphone sales account for the lion’s share of online shopping in India today.

In the first quarter, close to 20 million smartphones were shipped to the country, accounting for about one in three mobile phones sold, the rest being basic feature phones.