Ola, Uber's fiercest rival in India, has raised $1.1 billion from investors including Chinese internet giant Tencent and Japan's SoftBank.
The funding will give the ride-hailing service firepower to continue fighting Uber in one of the world's largest mobile markets.
Ola revealed it is also in advanced talks to raise another $1 billion from different investors, bringing the total funding round to just over $2 billion. Following the close of the round, Ola will have a valuation of around $7 billion, a source familiar with the situation told CNBC. The source also said that U.S. investors will be involved in the second tranche of the funding round.
The start-up, which is present in 110 cities across India, said it will use the money to invest heavily in artificial intelligence technology and penetrate new areas of the country.
Timing of the deal could work in Ola's favor given the troubles at Uber. The $70 billion ride-hailing app has recently installed a new chief executive, Dara Khosrowshahi, after founder Travis Kalanick stepped down following a series of scandals. The company has also been having its own power struggles in the boardroom.
But Uber has previously noted how important the Indian market is for the company. The company said in 2015 that it would invest $1 billion in India that year.
Still, Ola has been battling hard against its American rival, trying to create localized products. Users can hail rickshaws and motorbikes, for example, which are popular in large Indian cities. Uber has followed suit, launching similar products.