Pepsico need not divest stake in bottling arms: Govt
The government cleared the way for US $ 50 million foreign direct investment from Pepsico, by exempting the beverages major from fulfilling a requirement to divest 49 per cent stake in bottling firms to Indian companies.business Updated: Jan 02, 2009 15:12 IST
The government on Friday cleared the way for US $ 50 million foreign direct investment from Pepsico, by exempting the beverages major from fulfilling a requirement to divest 49 per cent stake in bottling firms to Indian companies.
The decision was taken by the Cabinet Committee on Economic Affairs since guidelines for food processing sector now allows 100 per cent FDI, Science and Technology Minister Kapil Sibal told reporters after the meeting.
"When Pepsico India Holding Private Ltd first invested in India, guidelines for investment were different. The guidelines have changed now," he said.
As such, CCEA decided to delete the previous requirement, a decision which would result in FDI inflow of USD 50 million into the country, he said.
A Pepsico India Holding spokesperson refused to comment on the decision on the ground, saying he wasn't aware of the details of the CCEA decision.
When Pepsico Holding came to India way back in 1997, it was asked to mandatorily disinvest 49 per cent of equity in its Indian bottling arms to domestic companies in five years. The same condition was applied to Coca Cola India as well.
Coca Cola complied with the decision in 2002, although it repeatedly requested for waiver of the condition.
When asked whether Coca Cola would also be given this kind of exemption, Sibal said CCEA decided in the case of Pepsico today. "When the decision on Coca Cola is taken, you will be informed," he told reporters.