US-headquartered e-commerce firm eBay is planning to merge its India operations with Bengaluru-based Flipkart and participate in its USD 2 billion fundraising efforts, according to a report in Factor Daily.

The deal will see eBay India get folded into Flipkart, the report quoted two people familiar with the development as saying.

eBay India head Latif Nathani, had quit the company earlier this month. To create a leaner structure, eBay laid off about 100 employees at its technology centre in Bengaluru last November. eBay India had then clarified that there was some churn which was part of regular reviews of its operational structure, but had not disclosed any numbers.

"eBay does not comment on rumour or market speculation," an eBay India spokesperson said.

Moneycontrol had reported earlier on Thursday that eBay is part of the consortium of new investors investing in Flipkart along with Microsoft and Tencent in the latest round. News wire Bloomberg was the first to report about the expected fund raising effort earlier this week.

Flipkart is expected to close the USD 1 billion funding round within a month and will hit the market to raise another billion after that, sources close to the developments told Moneycontrol. Its largest investor Tiger Global will not participate.

The funding is crucial for the firm that is struggling to maintain its leadership against US-headquartered Amazon.

According to report, the valuation of the company has been brought down from from USD 15.5 billion in 2015 to USD 10 billion in the current round.

FLIPKART'S FUNDING TIMELINE

The development comes at a time when Flipkart is also reported to be in talks to acquire rival Snapdeal, paving way for consolidation in the capital guzzling e-commerce industry.

If a Snapdeal-Flipkart merger takes place, it will be a saviour for the eBay's large holding in Snapdeal.

With this round, eBay will become a common investor in both Snapdeal and Flipkart. It makes sense to join forces to fight Amazon, which has readied a fresh USD 3 billion cash pile to be invested in India.​

Over the past year, Flipkart has been struggling with markdowns by investors and increased competition.

The most recent markdown was from a mutual fund managed by Morgan Stanley.

Flipkart last raised USD 700 million in 2015 in a round led by Tiger Global, which saw participation from other existing investors as well.