With China fast losing its edge as a sourcing hub, global e-commerce portal Alibaba.com is eyeing a 50 per cent rise in the number of SMEs from India registered on its website to three million by FY'12 end, a senior official said.

"China is losing its lustre and many buyers are increasingly opting for other markets... We expect growth from India to continue to be 50 per cent which will take us to three million accounts by March-end," the company's Country General Manager, Sandeep Deshpande, told PTI.

He listed appreciation of the Chinese renminbi versus the US dollar, rising labour costs and increasing instances of tax subsidies for special economic zones being withdrawn as the disadvantages affecting China currently.

India, on the other hand, is getting fast recognised as having a culture of innovation having a focus on R&D, he said, though the "getting-it-cheap" tag is also not associated with India.

The Hong Kong Stock Exchange-listed company acts as a platform which typically connects first-world buyers with the cost-effective suppliers from emerging markets. It charges subscription charges from every registering supplier, while buyers are not charged.

The b-2-b (business-to-business) company, which opened its India office in August, 2010, is undertaking a slew of initiatives like having offline trade fairs to increase its presence in India.

"A large part of our marketing dollars are spent on getting the buyers. Once they increase, the suppliers' registrations obviously go up," he said, adding it presently has over two million Indian small businesses registered on its website, which have come in "purely by word-of-mouth".

India accounts for 10 per cent of registrations and is at par with China presently. It has been identified as a "strategic market" along with US, Japan and China by the company management, Deshpande said.

In India, there is no sector which is clear leader in the number of supplier registrations, Deshpande said, adding engineering and machinery which accounts for 10 per cent of the pie is the largest.

Alibaba recently held its second offline trade fair in India and is targeting of up to USD 8 million through the fair, which had buyers like global tyre major GoodYear, French retailer Auchan and American stationery stores chain Office Depot participating.

It presently operates from five locations serving SME (small and medium enterprises) clusters in India with 100 employees, Deshpande said, adding things like increased internet penetration and growing zeal to start own ventures are the tailwinds for its operations in India.