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Alibaba plans a full-fledged entry into Indian ecommerce

19 March 2016

Chinese ecommerce major Alibaba, so far a passive investor in Indian companies such as the Kunal Bahl-backed Snapdeal and Vijay Shekhar Sharma's One97Communications that operates Paytm, has announced its full-fledged entry into Indian ecommerce.

''We are planning to enter the ecommerce business in India in 2016,'' Alibaba group president J Michael Evans told reporters in Delhi on Friday after meeting Communications and IT minister Ravi Shankar Prasad.

''We have been exploring very carefully the e-commerce opportunity in this country, which we think is very exciting against the backdrop of Digital India,'' Evans said.

This could put Jack Ma's Alibaba in head-on competition with Jeff Bezos' Amazon in India. The country's top ecommerce player Flipkart, founded by Sachin Bansal and Binny Bansal, would also need to strategise to keep its top position.

In October 2014, Amazon had announced a $2-billion investment in India and its executives said later that the group had an open cheque book for the market.

The announcement by Alibaba comes at a time when China's economy is going through a slowdown. Alibaba, which is keen on international expansion, would find India an attractive market at this point, analysts said.

Pegged at around $15 billion now, ecommerce in India is projected to grow to $69 billion out of a total global online pie of more than $100 billion by 2020, Goldman Sachs said recently.

Till now, Alibaba has focused on the business-to-business or wholesale space and had not indicated its interest in front-end ecommerce in India. The company could come alone as an online marketplace player or enter ecommerce as a partner with another company, it is learnt. It could look at organic growth as one of the options.

Speaking about the meeting, Prasad said, ''We hope Alibaba will come and have a good footprint in India, including the expanding business of ecommerce (for which) they are exploring the possibility. I have said very clearly that Alibaba is quite free to come and expand its footprint in India.''

At present, foreign direct investment is not permitted in the ecommerce sector. However, there are no restrictions on foreign money in the online marketplace. Amazon, Flipkart, Snapdeal and Paytm are all online marketplaces, which host sellers on their respective sites.

Alibaba already has a strong foothold in Indian ecommerce through its investments. The group is the majority stakeholder in One97Communications and is learnt to be keen on increasing its stake further. Snapdeal raised $500 million from a clutch of investors including Alibaba last year. Also SoftBank, which is the biggest investor in Alibaba, has made significant investments in Indian ecommerce including Snapdeal.

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