June 26, 2007
Starbucks to Brew A New Story for India By Nayanima Basu
New Delhi
Starbucks, the world's largest coffee-shop chain, remains bullish on
India as it has decided to send a fresh application after the
government rejected its earlier proposal.
"It's they (Starbucks) who told us that they will file a fresh
application and if they do we will have a look at it for
consideration," Ajay Dua, secretary, in the department of industrial
policy and promotion (DIPP), told IANS.
The US-based company, officials said, decided to file a new proposal
as the government sought some clarifications in its equity
structure, official sources said.
The company had been trying to enter the Indian market for sometime
now to tap its huge coffee-drinking market.
It had also selected as an India partner New Horizons, a company
promoted by Pantaloon Group's Kishore Biyani and Indonesia-based NRI
V.P. Sharma.
But the proposal to enter India was rejected by the Foreign
Investment Promotion Board, a government body that approves foreign
investment applications in India, on the ground that the equity
structure was ambiguous.
The company had, in the meantime, already announced its intention in
opening its outlet in the shopping malls of Delhi and Mumbai.
India, quintessentially a tea-drinking nation, has been witnessing a
sudden emergence of ultra-chic coffee parlours across the country
and the good news is that coffee consumption is on the rise.
The organised coffee retail business in India is over Rs.8 billion
($17 million), and the potential for coffee retail outlets are
3,000, says global retail consultancy firm, Technopak Advisors.
With the Indian middle class ready to spend more and be a part of
global lifestyle and culture, coffee parlours in the country are on
an expansion spree.
From small-sized coffee parlours to classy coffee lounges leading
coffee parlours such as Café Coffee Day, Barista, Costa Coffee and
Coffee World have all been fighting hard to lure India's growing
middle class.
Experts say the coming in of foreign players like Starbucks and
other such as Gloria Jeans and Berries Coffee, who have also
expressed their desire to enter the billion-plus Indian market will
give rise to fierce competition.
Seattle-based Starbucks has over 7,000 outlets worldwide, out of
which about approximately 6,000 are in the US itself.
Countries where the company has a major presence are Britain,
Australia, Canada, China, Japan, UAE, Indonesia, Malaysia, South
Korea and Singapore among others.
"Starbucks should be allowed to enter India as they are not
displacing the neighbourhood tea-shops. They are one of world's
leading coffee chain and I find no logic why they are not allowed,"
said Arvind Singhal, chairman of Technopak Advisors.
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