Alibaba considers Tata partnership to support Indian expansion
Mon 21 Mar 2016
Alibaba is planning to establish a partnership with Tata Group to extend its online retail business in India.
A recent meeting between Alibaba Group president Michael Evans, global managing director K Guru Gowrappan and Tata Group chairman Cyrus Mistry, opened discussions on the joint venture.
The Chinese e-commerce giant had approached Tata to discuss opportunities to co-develop retail projects to take advantage of India’s rapidly growing online market. According to local reports, the companies spoke on a wide range of matters including logistics, offline stores, and omni-channel support.
‘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,’ a Tata spokesperson told reporters at an event in Delhi.
Sources familiar with the talks mentioned that it would take two quarters to finalise the deal. It was also suggested that Tata may not be the final choice, but that Alibaba is very interested in continuing the discussions.
While Indian e-commerce does not currently allow for Foreign Direct Investment (FDI), there is no limit on foreign funds in online marketplaces which connect sellers and buyers – a model employed by other retail giants such as Amazon, Flipkart and Snapdeal.
Alibaba has already expanded its e-commerce business in India, investing in Paytm and Snapdeal. It is expected that Paytm will split its payment branch from its marketplace to smooth Alibaba’s entry into the Indian e-commerce scene.
The Tata Group has helped launch several international brands inside India, including the world’s biggest coffee chain Starbucks through its Tata Global Beverages business. It is reputed for maintaining strong relations with its partners, supporting the brands through its extensive infrastructure and expertise.
The spokesperson cited above added: ‘Tata is the best match for Alibaba given the scale and capabilities both these players possess. Alibaba is keen to create a strong back-end network before launching its online portal.’