New Delhi, March 18 (PTI): The much-touted proposal of Alibaba's stake purchase in Indian e-commerce firm Snapdeal may have "fallen off" because of high valuations being sought by the homegrown online marketplace.

The deal, which was estimated at about $500-700 million, has hit a roadblock because of a high valuation demanded by Snapdeal, sources said.

Representatives for Alibaba and Snapdeal could not be reached for comments.

According to sources, the Chinese e-commerce giant was valuing the Indian firm in the range of $4-5 billion against a valuation between $6-7 billion sought by Snapdeal.

The stake purchase in Snapdeal would have given Jack Ma-led Alibaba a stronger footing in the Indian market, which has one of the largest Internet population globally.

Alibaba has been expanding its presence in India, including acquisitions.

Last month, Ant Financial Services - part of the Alibaba Group - said it would acquire 25 per cent stake in One97 Communications, the parent of mobile commerce firm Paytm.

A US-based investment banker said while private equity and venture firms were "hugely" interested in investing in e-commerce in India, they were adopting a cautious approach as they feel valuations were being "pumped up" to "exorbitant" levels.

"While acquiring a stake in Snapdeal would have been a good deal for Alibaba, high valuation could have forced it to back off," said the banker, who did not wish to be named.