Starbucks to brew a new story for India

Tuesday, 26 June 2007, 07:00 Hrs
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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 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 Caf頃offee 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.
Source: IANS
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