NEW DELHI — and Alibaba may be dominating global financial headlines, but the e-commerce action also is heating up in the world’s second-most-populous country.

This story first appeared in the May 23, 2014 issue of WWD. Subscribe Today.

On Thursday, Flipkart, India’s largest online retailer, acquired fashion and apparel e-tailer Myntra for an undisclosed amount. Myntra in the past has been valued at more than $370 million, while Flipkart has been valued at more than $1 billion.

Myntra has been one of the fastest-growing e-commerce companies in India, focusing on apparel. Flipkart, which started out as an online bookseller, has been trying to grow its fashion segment, which it launched two years ago. The company passed the $1 billion valuation mark in March, a year ahead of its own projected timeline of 2015.

Analysts said the Myntra acquisition also is aimed at competing better against Amazon, which has grown rapidly since it entered the Indian market last year.

“Flipkart and Myntra are getting together to create one of the largest e-commerce stories and together we will dominate the market,” Sachin Bansal, cofounder and chief operating officer of Flipkart, said Thursday.

“Fashion is a category of the future. This acquisition will help us become leaders in this category,” he said, adding that Flipkart would invest $100 million in its fashion business in the near term.

While analysts have been predicting that Flipkart might change Myntra’s name and combine offices, Bansal dismissed the prospect. Myntra will remain a separate entity and its chief operating officer Mukesh Bansal, who is not related, will head the fashion business at Flipkart and be on the board.

“I’m here for the long haul and we will continue to grow in the market. It was very essential to keep Myntra a separate entity and preserve its culture,” said Mukesh Bansal.

The two biggest fashion e-commerce companies — Myntra and Jabong — changed the way online apparel sales were perceived by making their first alliances with two of the premier fashion weeks in the country.

Jabong made an exclusive partnership with Lakmé Fashion Week held in Mumbai in March, and Myntra tied up with the Wills Lifestyle India Fashion Week, also in March, in collaboration with the Fashion Design Council of India.

As analysts deliberated about what Flipkart’s acquisition of Myntra would mean for the fashion space, there were mixed reactions. “Bottom line, it may be good news for investors and founders but bad news for consumers and the fashion industry at large,” said Harminder Sahni, managing director of retail consulting firm Wazir Advisors. “Had Myntra stayed independent, it could have become as large as Asos. This consolidation will force other fashion retailers to junk their fashion-only focus and they will end up adding other categories or will merge with multicategory retailers.”

Other observers believe the combined platform will only open more doors to e-tailing. Myntra’s founders, Mukesh Bansal and Ashutosh Lawania, are upbeat about market prospects, given that Myntra already makes an estimated 20,000 shipments a day across 400 cities with both branded products and its own private-label brands — like Dressberry. Myntra recently launched a plus-size segment and has plans to open brick-and-mortar stores by next year.

India’s e-commerce market grew 88 percent in 2013, to $16 billion, according to a survey by Associated Chambers of Commerce and Industry. There are an estimated 200 million Internet users in the country, with an estimated 89 million exploring online shopping.

The survey noted online shopping was highest in Mumbai, followed by New Delhi and Kolkata.

But the competition in e-commerce is heating up.

Snapdeal, another e-tailer, raised $100 million in funding on Wednesday. Snapdeal now is also valued at $1 billion, the fourth Indian e-tailer to hit that level.

Snapdeal, which has 500 product categories and 25 million registered shoppers, has grown 600 percent in the last 12 months, according to its founder and chief executive officer Kunal Bahl. The company raised $340 million in funding in February, led by eBay. In a previous round, eBay had invested close to $50 million in Snapdeal, reportedly getting access to the site’s 20 million registered users, logistics software and distribution network.

Snapdeal, like eBay and China’s Alibaba, operates as an online retail marketplace, offering a platform for individual buyers and sellers to make their transactions. This has been the only mode of functioning for global e-tailers in India as foreign direct investment in the e-commerce space has not been allowed by the Indian government.

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