Alibaba will pump in up to USD 300 million in online grocery player, BigBasket, according to industry sources.
The deal, which is expected to be announced in the next few weeks, will give BigBasket more muscle to compete against rivals like Grofers and e-tailing giant Amazon, they said.
The sources did not wish to be identified as the discussions are private.
BigBasket and Alibaba did not respond to emails.
In November, the Chinese e-commerce major had sought approval of the Competition Commission of India (CCI) for acquiring stake in BigBasket.
Investing in BigBasket would help Alibaba add more muscle to take on US-based rival Amazon, while for Paytm, the move would further strengthen its play in the Indian e-commerce space.
Amazon India has received governments approval for its proposed USD 500 million for retail in food sector. It is also ramping up its business in the segment with Amazon Pantry and Amazon Now.
BigBasket has operations in Bengaluru, Hyderabad, Pune, Mumbai, Chennai, Delhi-NCR, Ahmedabad, Patna, Kolkata, Jaipur, Vijayawada, Indore, Punjab and Lucknow.
The company has raised over $200 million from investors including Abraaj Group, Bessemer Venture Partners, Growthstory, Helion Venture Partners, IFC and Sands Capital.
With people becoming comfortable buying even milk and bread online, the online grocery segment is projected to witness a strong growth over the next few years in India.
According to a report by Franchise India, the online grocery market is expected to be Rs 2.7 billion market by 2018-19