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Why Amazon, Google Are Sizing Up Another Indian Retailer

After Walmart paid $16 billion for a majority stake in one of India’s largest e-commerce players, Google and Amazon are angling for a piece of the action in the country’s hot retail sector, too.

According to the Economic Times of India (ET), Google is in talks with Alibaba owned Paytm Mall to form a consortium that would vie for a 7 percent to 10 percent stake in Future Retail that owner Kishore Biyani, CEO of parent company Future Group, is reportedly seeking to sell.

Reports indicate that the planned consortium is designed to thwart attempts by Amazon to battle for the stake. Future Retail operates Fashion at Big Bazaar and HyperCity, both of which sell apparel. Across its more than 900 stores in 250+ cities, Future Retail controls more than 22 million square feet of retail floor space and serves more than half a billion shoppers annually.

Indian law allows for 100 percent direct investment by foreign actors in physical retail “cash-and-carry” businesses, but limits foreign investment in multi-brand retailers to just 51 percent, according to ET.

Experts including Boston Consulting Group predict that consumption in India could reach $4 trillion by 2025, making it an attractive destination and investment opportunity for growth-minded enterprises.

For its part, Amazon seems to be making international sales a marketplace priority as a means of establishing its dominance over competitors like eBay and Alibaba. In 2017, Amazon sellers generated a quarter of their revenue from overseas, a jump of 50 percent from the prior-year period. According to a New York Times article, Amazon executives have said India could be the company’s second largest market within a decade.

Nearly a year ago, Amazon purchased a 5 percent stake in Shopper’s Stop, an Indian brick-and-mortar chain of department stores with 83 locations in 38 cities.

Google also has taken an international view of retail, coughing up a $500 million investment in China’s and now looking to penetrate what is poised to be a lucrative and influential consumer base.