U.S. retail giant Walmart Inc.'s ongoing investment negotiations with Indian online marketplace Flipkart India Pvt. Ltd. include the launch of a proposed chain of retail stores in India, The Economic Times of India reported, citing an investment banker familiar with the matter.

"Flipkart has been trying to foray into offline stores for a long time and has been looking for the right partner," the source told the news outlet.

Walmart is in talks to buy more than a 30% stake in the Indian company to better compete against U.S. online retail giant Amazon.com Inc. However, Walmart is expected to acquire only a 20% stake due to objections from Flipkart's newest investor SoftBank Group Corp., the report said, citing people privy to the negotiations.

Walmart already has a presence in the country via its 21 business-to-business Best Price Modern Wholesale stores, but it cannot directly open retail stores due to government restrictions on overseas investments in the multibrand retail format, the report said.

Meanwhile, Flipkart reportedly requires a huge amount of capital and suitable infrastructure to move into the retail chain segment. The e-commerce company is reportedly planning to buy retail chain Vishal Mega Mart from TPG Capital and Shriram Group.

The report added that an alliance between the two companies will likely mirror Walmart's investment in JD.com, in which the Chinese company's management was not disturbed.

Flipkart and Walmart spokespersons declined to comment, the news outlet said.