Date:03/01/2009 URL: http://www.thehindu.com/2009/01/03/stories/2009010360491400.htm

Business

Pepsico to bring in $50 million foreign direct investment

Special Correspondent

Exemption from divesting 49 % stake in its Indian bottling firms

NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) on Friday cleared the decks for a $50-million (about Rs. 250 crore) foreign direct investment (FDI) from Pepsico Holdings, by exempting the company from divesting 49 per cent stake in its Indian bottling firms to domestic companies.

New guidelines

The decision was in view of the new guidelines for the food processing sector that now allows 100 per cent foreign direct investment.

Briefing newsmen after the CCEA meeting, Union Minister for Science and Technology Kapil Sibal said that when Pepsico Holding came to India , it was asked to 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.

Applies to Coke also

Asked if Coca Cola would be granted similar exemption, Mr. Sibal said that when a decision on the company would be taken, due information would be shared.

Pepsico’s case for waiver from the divestment requirement was heard by the Foreign Investment Promotion Board for the third time in October last year.

It had subsequently referred the case to the CCEA.

Pepsico India Holding has 100 per cent stake in Aradhana Soft Drinks Company and the deadline for divesting stake expired in 2007.

The decision would enable Pepsico to bring in much-needed FDI into the country.