Softbank owns 35 per cent of Snapdeal's parent company, Jasper Infotech, and is talking with Flipkart investors about selling Snapdeal for around £810m, the Financial Times reported.
Amazon has plans to spend £4bn in India to become the country's foremost online retailer, threatening the likes of Snapdeal and Flipkart.
But, all three retailers are making a loss as they invest heavily into logistics chains and marketing. This has dragged down the companies' valuations. Early last year, Snapdeal completed fundraising that valued it at $6.5bn, and in 2015, Flipkart was valued at $15bn.
Reuters reported that Snapdeal's founders, Kunal Bahl and Rohit Bansal, who own 6.5 per cent of the company, sent an email to staff saying there would be no disruption to staff as the company's "way forward becomes clear".
"We will do all that we can, and more, in working with our investors to ensure there is no disruption in employment and that there are positive professional as well as financial outcomes for the team as the way forward becomes clear," he said.