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Posted: Wednesday, July 25 2007. 3:00 PM

Starbuck Postpones India Debut Due To Uncertainties

Lovers of Starbucks coffee may have to wait couple of years more for their favourite brand. It joined Tesco and Carrefour in postponing its planned entry due to the flip-flop policies on FDI by the government, reports Economic Times.

Starbucks, the world's largest coffee retailer on Friday withdrew its application from the Foreign Investment Promotion Board (FIPB), almost a month after the Indian government asked it to revise its entry proposal for the second time. With speculation about the government further tightening franchisee regulations gaining strength, foreign players like Starbucks have become anxious.

The Seattle-based coffee chain had proposed to enter India via the franchisee route, but was told by the Indian government to consider the FDI route instead. Indian laws currently allow up to 51% FDI in single-brand retail.

In a press statement, a Starbucks spokesperson said: "Starbucks has notified the ministry of commerce & industry and FIPB that we decided to postpone our entry into India and officially withdraw the application to operate single-brand retail stores in this country. '

The company didn't give any timeline for its postponed India debut. "It is premature for us to announce any new dates. We remain excited about the great opportunities that India presents to Starbucks. We look forward to offering high-quality coffee, handcrafted beverages, legendary service and the unique Starbucks experience to customers in India at a later date," said the spokesperson.

Starbucks first announced its decision to enter India in 2006. Its first application with FIPB was rejected due to 'lack of clarity' over the foreign shareholding in the Indian company.

In April, this year, Starbucks submitted a revised application, stating that it would not hold any equity in India operations managed by New Horizons Retail, its licensee for India.

Last month, the DIPP rejected their proposal again and asked the company to take the 51% FDI route.

Starbucks had hoped to be in the Indian market, starting in Mumbai this summer. The plans got postponed to winter and now they have been postponed indefinitely.



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