NEW DELHI (AFP) -Starbucks, the world’s largest coffee shop chain, has said it is postponing its plans to enter India but remains “committed” to opening up in the country.
Seattle-based Starbucks said in May it aimed to open the first of 100 planned outlets in New Delhi or Mumbai by the end of 2007.
But the company has formally withdrawn its application to operate through its wholly owned subsidiary, Starbucks Coffee International, the statement issued late Friday by the company’s US headquarters said.
“Starbucks is reviewing all its options and evaluating how we can proceed related to our entry into one of the fastest growing economies in the world,” said the statement, quoted by Press Trust of India.
The company gave no reason for its decision.
It said it remained excited about the “great opportunities that India presents” and was committed to opening in India, but gave no timeframe.
“It is premature for us to announce any new dates,” Starbucks said.
The company in May submitted a fresh application to India’s Foreign Investment Promotion Board for clearance after an earlier request to forge a joint partnership was turned down.
The first application was refused because of concerns about its proposed ownership structure, which was to be split among Starbucks, Indian retailer Kishore Biyani and VP Sharma, Starbucks’ business partner in Indonesia.
The joint venture structure was not in line with Indian rules that allow up to 51 percent foreign investment in single-brand retail outlets. The combined stakes of Starbucks and Sharma would have breached the foreign direct investment (FDI) limit.
The decision by Starbucks came nearly a month after the government after the Indian government asked it to revise its entry proposal for a second time.
Starbucks had initially sought to enter India through the franchisee route but was told by the Indian government to consider the FDI route instead.
Local coffee chains have mushroomed in tea-drinking India in the past few years as spending increases because of a booming economy.
The decision came among uncertainty about the government’s FDI policy.
Earlier this year, the world’s second largest retail company, Carrefour of France, said it was putting its India plans on hold until “policy issues on FDI in retail are made clear.”
In June, British supermarket giant Tesco said it would wait for changes in FDI regulations to enter India.