updated 6/23/2004 2:40:51 PM ET 2004-06-23T18:40:51

Online auction giant eBay Inc. is buying Baazee.com Inc., India's most popular online shopping site, for $50 million to extend its reach in the world's second most populous country.

The deal is expected to be completed by September, the two companies said in a joint press statement Wednesday.

Internet usage is low in India, a country of more than 1 billion, with only 4 million Internet connections. But eBay is betting on the future.

"Although it is early days for e-commerce in India, we believe there is great opportunity over the long term," said Meg Whitman, president and CEO of eBay, which is based in San Jose, Calif.

Baazee, based in India's financial hub, Bombay, claims it has 1 million registered users. In the Hindi language, "Baazee" means the prize for a contest or race.

"Our local expertise combined with eBay's global perspective will allow us to take e-commerce in India to the next level," said Avnish Bajaj, chairman and CEO of Baazee.

Citing studies, Baazee said there are 17 million Internet users in India and the number is expected to rise to 30 million by 2006.

Many Indians who do not own computers visit cyber cafes to browse the Internet. Most online shoppers buy mobile phones, railroad tickets, clothes, toys, books and compact discs.

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