Chinese etailer Alibaba is in advance talks to snap up a $500m (£330.4m) stake in India’s One97 Communications’ mobile payment platform Paytm.

The deal, which is expected to complete by the end of the month, will be Alibaba’s first major investment in India’s fast-growing tech business. Under the terms of the deal, Alibaba and Alipay, the payment unit of the Chinese ecommerce firm, will hold between 30% and 40% of One97 following the investment, sources told Reuters.

Paytm, which has more than 20 million registered users, acts as a mobile wallet, enabling users to spend on services such as Uber.

Such a deal will enable Indian shoppers to make purchases on Alibaba sites by making payments through Paytm.

A source told Reuters that the investment will be used to expand Paytm’s services, with a view to controlling the online payment business that is expected to grow significantly in the next few years in India.

Alibaba was founded by Jack Ma 15 years ago and has become the biggest online retailer in China. UK retailers including Burberry, Karen Millen and Asos sell on its Tmall platform. At $25bn (£16.5bn), Alibaba’s float in the US last year was the largest ever global IPO.