• Employees work at the One97 Communications Ltd. headquarters in Noida, Uttar Pradesh, India. One97 operates PayTM.

Employees work at the One97 Communications Ltd. headquarters in Noida, Uttar Pradesh, India. One97 operates PayTM. (Photo : Getty Images)

Chinese e-commerce giant Alibaba Group may soon have direct presence in India's online retail sector as Paytm plans a spinoff of its marketplace business next month, the Economic Times reported.

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"The contours of the spinoff, paperwork and board members are being finalised and the official launch is planned in November," a top source from Paytm was quoted as saying.

Paytm's spinoff plan was first reported in March, according to the report.

But ahead of this plan, a three-day festival sale is being planned by Paytm, which will start on Oct. 12, with cashback offers totaling over Rs 100 crore by merchants on its platform as key selling points of the event.

The report said that customers in smaller towns and cities are the targets of the sale and kitchen, fashion and home furnishings are the mostly on sale.

"India is an important market and Paytm is an important strategic partner," an Alibaba spokesperson said.

Both Alibaba and Paytm refused to comment on the planned spinoff.

In the first week of October, India's big three online retailers--Flipkart, Amazon and Snapdeal--held their festival sales, which received warm response from buyers. Before Diwali (Festival of Lights) at the end of the month, more sales are being planned as Snapdeal is preparing for another sale that will begin on the same day as Paytm's.

More discount sales are in the offing before Diwali at the end of the month, and Snapdeal is already off the blocks with another sale which begins the same day as Paytm's.

Flipkart and Amazon dominate the Indian online retail market and Flipkart is in talks to gain Walmart's support in finance and strategy.

Meanwhile, Alibaba Group's presence in India is made possible through Paytm and Snapdeal and direct entry into the market is seen to raise competition and result in a shakeout, the report said.

In August, it was reported that Alibaba plans to unveil its business-to-consumer site Tmall in India, which include Kishore Biyani's Big Bazaar as one of its key sellers.

"We expect 10 million transactions in three days," Saurabh Vashishtha, vice president for business and product management of Paytm's ecommerce marketplace, said. "This year we have lined up total benefits of more than Rs 1,000 crore including cashbacks and discounts on three days of the Maha Bazar Sale."

Saurabh Bansal, its head of Snapdeal's category management, said that Snapdeal's sale will offer electronics, fashion and home products. The official said that the company sold 11 million products during its first sale earlier this month.

Last week, Flipkart, the country's largest online retailer, sold more than 15.5 million units during its five-day festive sale, slightly more than rival Amazon India, which sold ver 15 million units. The company said it met its target of $500 million in gross sales, mostly from the sale of exclusive smartphones and large appliances such as televisions. It also included fashion retailer Myntra.