Starbucks to file fresh papers for India entry

International coffee chain Starbucks will send a revised application to the department of industrial policy and promotion (DIPP) for an entry into the Indian market.

The department is of the view that Starbucks should enter through the FDI route. The coffee chain had earlier applied for entry through the franchisee route. Under this proposal, the master franchisee was New Horizons Retail, floated by Indonesia-based NRI VP Sharma and Kishore Biyani, the CEO of the Future Group.

"We asked New Horizons Retail to furnish details of its equity structure. The company asked us to put its earlier application on hold," said a commerce ministry official.

The DIPP is looking into the share-holding pattern of New Horizons Retail. While Sharma holds 51 per cent in the joint venture company, Biyani has the remaining 49 per cent.

The DIPP feels that the shareholding pattern of the company does not conform to the FDI norms, given that the majority stake is held by an NRI.

The official said the proposal had not been rejected. "We have not sent the proposal to the Foreign Investment Promotion Board (FIPB), 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," he added.

When contacted, a Starbucks official said, "We continue to work closely with the Ministry of Commerce and Industry and the FIPB to provide the additional information that they need."

The DIPP's annual review of the FDI policy is likely to be over by July-end. "The review was supposed to be completed by March, but consultations with ministries are taking time," the official added.