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India's e-commerce sector is a prize, but one that may end up being spread thinly. A $1 billion fundraising by market leader Flipkart and additional $2 billion investment from Amazon into its local expansion shows that online retail on the subcontinent has potential to grow like China, where consumers spent almost $300 billion online last year.
Read: Amazon to invest $2 billion more in India
The big difference is India's openness. While that facilitates investment, it also makes it unlikely India will end up with an answer to dominant Chinese e-commerce group Alibaba.
The comparison is apt, because as the country's largest online marketplace with 22 million registered users, Flipkart points to Alibaba as its model.
Its founders hope to reach a similar valuation to the $100-plus billion that the Chinese company could fetch in an imminent New York listing.
Read: Flipkart raises $1 bn in funds, beats giants in values
Flipkart's latest fundraising from investors including Singapore's sovereign wealth fund GIC and Morgan Stanley Investment Management values it at just $7 billion, according to a person familiar with the situation.
The overall e-commerce opportunity in India and China is comparable too.
The two emerging markets both have massive populations of over one billion, buoyed by a rising middle class, rapid GDP growth and challenging infrastructure.
India's internet retailing sector grew 20% last year by value, according to Euromonitor International. Yet it's hard to see any single player in India emerging with Alibaba-like market share.
The Chinese company controls almost 85% of its home country's e-commerce sales and had $270 billion of gross merchandise volume in its last fiscal year.
Flipkart's market share in India was not even 5% in 2013, according to Euromonitor International, and it has also only just crossed the $1 billion mark for value of goods sold.
India is much more accessible than its neighbour, both in terms of culture and investment barriers. That's both its biggest draw and the biggest obstacle.
Foreign e-commerce players struggle in China, where investment in the sector is strictly regulated.
In India, Amazon is rapidly expanding and eBay has made a substantial investment into rival Snapdeal. Even Alibaba could choose to enter the fray.
India isn't quite the new China for e-commerce groups, but it's still too promising to ignore.
Flipkart, India's largest internet retailer, announced on July 29 that it had raised $1 billion in its latest round of fundraising.
The funds will be used to make long term strategic investments in India, especially in mobile technology, the company said in a statement.
Singapore's sovereign wealth fund GIC participated in the fundraising along with existing investors Tiger Global Management, South Africa's Naspers, and Morgan Stanley Investment Management.
The online marketplace was launched in 2007 by two former Amazon employees. It has 22 million registered users, handles 5 million shipments a month, and has a gross merchandise volume of $1 billion.
"We don't need to go for an IPO. The investors are not in a hurry. An IPO will happen when our business model has stopped evolving," co-founder Sachin Bansal told the Business Standard.
"India is set to have many $100 billion companies and Flipkart could be one of those. We are ready to do what it takes," he added.
In May, the company raised $210 million. In the same month, it acquired fashion portal Myntra. That deal that was worth about $300 million, sources told Reuters.