For online retail market in India, Alibaba may tie up with Tata’s

For a possible partnership, the Chinese e-commerce giant Alibaba has approached Tata Sons as it looks to set up shop in India later this year in a development that looks set to shake up the country’s rapidly growing online retail market. Alibaba Group president Michael Evans and global managing director K Guru Gowrappan met Tata Group’s chairman Cyrus Mistry recently to discuss a partnership possibility.

A person with knowledge of the meeting said “It will take two quarters for Alibaba to finalise a joint venture partner. It may or may not go with the Tata Group in the end but they are definitely talking. They would have discussed initial deal contours beyond online retail.”

The discussion would have also covered areas such as logistics, offline stores and omni-channel to support Alibaba’s core e-commerce business, the person said. Alibaba could have approached others, including another e-commerce company. “India is set for a big consolidation in e-commerce,” said the person.

A Tata Sons spokesperson said, “Several entities have appreciated our model and have expressed interest in it at different points of time. We do not wish to comment any further.” Evans had said in Delhi on Friday that the company plans to enter India’s e-commerce segment this year. “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 told reporters after meeting communications and IT Minister Ravi Shankar Prasad.

FDI is still not allowed in the e-commerce sector but there are no restrictions on foreign funds in online marketplaces—the model adopted by the big three of Amazon, Flipkart and Snapdeal— that connect sellers with buyers. 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.