MUMBAI: India’s e-commerce market is already fiercely competitive, but the battle looks set to intensify after reports that Walmart is in talks to acquire a 40% stake in Flipkart.

In what would amount to one of its biggest overseas deals, the world’s largest retailer is looking at buying new and existing shares in the Indian e-commerce giant.

That is according to two unnamed sources who revealed the development to Reuters last Friday, adding that due diligence is likely to begin as early as this week.

Although both Walmart and Flipkart declined to comment on the specifics, Reuters reported that Flipkart could be valued at more than the $12bn figure given when Japan’s SoftBank Group took about a fifth of the firm last year for $2.5bn.

However, a spokesperson for Walmart India did tell Business Today that “India is an exciting and priority market. Our Global CEO Doug McMillon was in the country for India Business Review for all its three entities – India Cash & Carry business, Global Technology Centre and Global Sourcing”.

According to the Reuters report, a deal with Amazon would give Flipkart “much needed muscle” in its fight against Amazon, which has committed to investing $5bn in the country.

And for Walmart, a deal with Flipkart would represent just the latest stage in its determined drive into e-commerce, having already acquired in September 2016 and announcing just last month that it was forming a strategic alliance with Rakuten, the biggest e-commerce operator in Japan.

Walmart and Rakuten announced at the time that they also planned to take direct aim at Amazon’s Kindle e-book business in the US, where Rakuten’s Kobo subsidiary will sell e-books, audiobooks and e-readers in Walmart’s US stores.

Commenting on Walmart’s latest plans for India, one of the Reuters sources said: “As large as they are, Amazon has eaten away a significant chunk of their revenues and I think … they view India as the largest market possibly for this [taking on Amazon].”

Sourced from Reuters, Business Today; additional content by WARC staff