Uber's Indian rival Ola said Wednesday it has raised $1.1 billion from investors led by Tencent, the first time the Chinese tech giant has put money into the ride-hailing company.

Ola and Uber have been in a fierce battle to gain riders and retain drivers and have spent millions of dollars to increase their share of the booming market.

Ola said existing investor SoftBank was among those providing fresh funds, and that it was seeking to raise another $1 billion.

It currently operates in 100 Indian cities and said it planned to use the funds for further  expansion.

It will also invest in technology to find better ways to tackle the country's congested roads, it said.

Tencent President Martin Lau said the investment in Ola would enable the company to be part of India's "fast-growing ride-hailing space".

Ride-hailing apps have risen rapidly to become a booming industry in India's congested cities, but face stiff resistance from traditional taxis and bans over safety concerns.

The country's growing taxi app market is projected to be worth $7 billion by 2020.