Alibaba Group may soon enter into an agreement with Micromax, a mobile phone manufacturer in India, to purchase a 25% stake in the latter for USD700 million.

According to reports in Indian local media, this will become the first time for Alibaba to buy Indian phone maker shares as a foreign investor if the deal is successfully signed.

IDC statistics showed that Micromax owns an 18% market share in the Indian smartphone market and the company mainly focuses on low-cost products. Inclusing debt, its market value is about USD3.5 billion.

With this potential transaction, Alibaba is expected to gain between a 20% and 26% stake in Micromax and the Chinese e-commerce giant will be able to enter the Indian market with this move.

Alibaba currently has its own mobile phone operating system, which is used to promote the development of its e-commerce business. Once cooperating with Micromax, Alibaba can pre-install its operating system on Micromax phones and further develop within the Indian e-commerce market.