Walmart is talking to India’s biggest e-commerce operator Flipkart about acquiring a 40% stake and a direct challenge to Amazon in Asia’s third-largest consumer market.

Walmart has been unable to enter the Indian market effectively, operating only 21 cash and carry wholesale stores now because of tough laws protecting India’s retailers.

Amazon picked up a $27.6 million stake in Indian retailer Shopper’s Stop Ltd to bolster its estimated $467 million e-commerce business in India.

Flipkart is India’s e-commerce leader

Flipkart is India’s largest e-commerce company with 40% of market share. Founded in 2007, its 2017 annual revenue was $3.1 billion with 33,000 employees.

It also owns fashion portals Myntra and Jabong as well as online payments provider PhonePe,

Investors in Flipkart include big names such as US hedge fund Tiger Global Management, China’s Tencent Holdings, eBay Inc and Microsoft).

A Morgan Stanley report estimates the Indian e-commerce market will grow to $200 billion within 10 years.

Walmart building e-commerce business

Since acquiring Jet.com for $3 billion in August 2016, Walmart has built its e-commerce business, expertise and market share to compete with Amazon and other retailers.

Walmart has 2.3 million employees around the world and 2016 annual revenue was $485.9 billion.

Analysts say an acquisition in India would improve Walmart’s growth prospects substantially and position Flipkart to compete more effectively with quick-growing Amazon.