China-based e-commerce giant Alibaba is reportedly in talks with one of India's largest retail groups to form a joint venture to challenge the dominance of Flipkart and Amazon in the world's fastest-growing economy.

Alibaba, one of China's two leading e-commerce companies along with JD.com, is reportedly eyeing a stake as high as 50% in Reliance Retail for US$5-6 billion, website Live Mint reported.

It is aiming to create a behemoth in the digital marketplace and also expand its physical retail businesses in India, the publication reported, citing anonymous sources.

The talks indicate that the battle for India’s booming e-commerce market may only intensify further, with two large and deep-pocketed companies planning to come together to take on the market leaders.

Alibaba’s executive chairman, Jack Ma, met Reliance Industries Ltd chairman Mukesh Ambani in July-end in Mumbai to discuss the proposal, the sources said.

The two discussed a number of issues, including a plan to create a large omnichannel retail entity through the proposed joint venture, they said.

The joint venture, if it goes through, will be the largest investment by Alibaba in an Indian company.