US giant Starbucks is set to make its debut in India in the next six months after signing a partnership deal with the country's giant conglomerate Tata, the two groups said Thursday.
The Seattle-based Starbucks has for years been eyeing the Indian market, where large US fast food giants like McDonald's, Domino's and Pizza Hut have already established a strong presence.
The first store will open some time in mid-2011, the chairman of Tata Coffee, RK Krishnakumar, told the CNBC-TV18 news channel after announcing the alliance with the global caffeine powerhouse.
"Tata Coffee Ltd has informed the Bombay Stock Exchange that Starbucks, the US giant coffee company, is making an entry with its famed stores into India," a statement from the company said.
Typically tea-drinking Indians are increasingly turning to coffee and upmarket cafes, which are promoted as sophisticated marks of affluence and good taste in the class-conscious nation.
But while Western-styled local coffee chains are commonplace in Indian cities, foreign companies' entry into the country's retail sector is a sensitive issue as small shopkeepers fear being driven out of business by multinationals.
The authorities have been hesitant to open up the retail sector quickly, but Western leaders have pressed them to accelerate the process during a recent spate of official visits to the country.
Regular coffee in India costs less than 10 rupees (about 22 US cents) at small restaurants, while more exotic flavours are priced between 50 rupees to 75 rupees (ê1.1 to 1.6) at Western-style cafe chains.
"India is one of the most dynamic markets, with tremendous potential," said Howard Schultz, chairman and chief executive of Starbucks Coffee, in a statement.
"India can be an important source for coffee in the domestic market and across many regions globally, where Starbucks has operations," he added.
Tata Coffee is a coffee bean supplier with operations spread across different growing districts in southern India.
Starbucks said it plans to source beans from Tata Coffee estates and will roast them locally.
Tata and Starbucks will train local farmers, technicians and agronomists to improve coffee-growing and milling skills.
India exports about 70 to 80 percent of its total coffee output, estimated at 299,000 tonnes for the fiscal year ending March.
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