Coffee shop chain Starbucks Corp. (SBUX.O) will send a revised application for its entry into India after its earlier proposal for a franchise operation was put on hold, the Business Standard newspaper said on Wednesday. India's Department of Industrial Policy and Promotion is of the view that the U.S. firm should enter through a foreign direct investment route as its franchise plan did not conform to foreign investment norms, the paper said, citing a government official.
It has been reported that Starbucks had proposed to enter the fast-expanding Indian market through a franchise 51 percent owned by its Indonesian franchisee V.P. Sharma, with the rest held by India's Future Group CEO Kishore Biyani.
This arrangement was not acceptable as Sharma was a non-resident Indian, the official told the paper.
"We have not send the proposal to the Foreign Investment Promotion Board, which will take the final decision on the matter. We don't know how the company will draft its new proposal and the route it will take," the official said.
Earlier, a local newspaper had reported that Starbucks had refiled its application, opting for a franchise rather than a planned joint venture because India had not cleared its proposal.
Foreign single-brand retailers can take 51 percent in a venture with a local Indian partner, while multiple-brand retailers are limited to cash-and-carry or franchise and license operations.Read more from: http://www.washingtonpost.com
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