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Uber has sold its food delivery service in India to local rival Zomato, the firms have announced. Uber will get a 9.99% stake in the Indian start-up, helping it maintain its presence in the sector.

All Uber Eats customers in India will now be redirected to Zomato but it’s unclear if the acquisition will cause lay-offs. The deal is likely to give Zomato an edge over its rival Swiggy in a fast-growing but fiercely-contested sector.

Zomato operates in more than 500 cities in India and the firm believes that the acquisition will further consolidates its presence.

“We are proud to have pioneered restaurant discovery and to have created a leading food delivery business across India. This acquisition significantly strengthens our position in the category,” Deepinder Goyal, Founder and CEO of Zomato, said.

Uber Eats launched in India in 2017 with a promise to revolutionise the sector. The San Francisco-based company has since been trying to increase its customer base, but faced tough competition from Zomato and Swiggy.

Darshini Kansara, an analyst with CARE Ratings, said that Swiggy and Zomato both had a better grip on the Indian market.

“Even though Uber Eats had the advantage of ‘global experience’, the Indian market is very different from a developed market – the price points and strategies. Other factors like having an interactive app where customers can post photographs and review food items, and tie-ups with restaurants gave Zomato and Swiggy an edge.”

Uber said India would continue to be its priority. “India remains an exceptionally important market to Uber and we will continue to invest in growing our local rides business, which is already the clear category leader,” Dara Khosrowshahi, Uber CEO, said.

Correspondents say the deal will further intensify the competition between Zomato and Swiggy.

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