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Alibaba eyes India market, in talks to take control of Paytm Mall

business Updated: Aug 12, 2016 12:24 IST
Sunny Sen

Founder and executive chairman of Alibaba Group Jack Ma. (REUTERS)

China’s internet giant, the Jack Ma-controlled Alibaba, might soon start competing with Amazon and Flipkart in India as it eyes new markets to hit Ma’s target of two billion users .

Alibaba, which posted quarterly revenue of $4.84 billion on Thursday, has initiated discussions with Vijay Shekhar Sharma-owned Paytm to either fully acquire or own a sizable share in the latter’s marketplace business, Paytm Mall.

In China, Alibaba has around 430 million users. Taking into account future rural penetration, this can go up to 600 million.

India, on the other hand, is just opening up. According to Mary Meeker’s Internet Report, India was the silver lining an otherwise bleak global internet landscape. Worldwide internet user growth, which was at 9%, would have gone the other way if India had not grown at 40%.

Other reports indicate that India’s user-base will cross 600 million users by 2020, and the 50 million online shoppers to go up to 150-200 million.

Meanwhile Paytm is looking at hiving off the Mall into a separate company, according to another source whom HT spoke with previously. “One97 will not hold any share in the separate entity,” the source said.

“Once that happens, Alibaba can easily acquire a sizable portion of Paytm Mall,” said Sanchit Vir Gogia, chief analyst of Greyhound Research. “Alibaba won’t have to start the business from scratch.”

Alibaba did not want to comment on specifics. “We do not discuss market speculations about our business plans in the media… India is an important emerging market with great potential and we are absolutely committed to developing this market for the long term,” the company said in an email.

If a deal works out, Paytm will get additional money to put into its payment banks business. Alibaba has already $675 million invested in Onwe97.

Paytm is seen as a mirror image of Alibaba. Paytm Mall, the source said, will either be renamed Alibaba or Tmall India. Tmall is similar to Amazon and Flipkart in China.