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Starbucks revises application for India entry

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US-based coffee retail giant Starbucks has filed a revised application with the Foreign Investment Promotion Board (FIPB) for its India entry. About three months earlier, FIPB had rejected Starbucks’ previous application to open single-brand retail stores in India, reportedly on lack of clarity on the foreign shareholding structure of the proposed venture. The previous application provided for Starbucks opting for up to 51 per cent stake. The remaining stake was to be held by Future Group’s Kishore Biyani and Starbucks’ Indonesian franchise owner VP Sharma, an NRI. The uncertainty arose because equity held by NRIs is also considered as foreign stake. For the record, the Indian government permits up to 51 per cent foreign stake in single-brand retail businesses.

Starbucks has now reportedly proposed to enter India through franchise route, rather than the JV model. If all goes well, the coffee chain may open some 100 outlets by early 2008 – starting with New Delhi or Mumbai.

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