Starbucks may open first India store

Starbucks Corp., the world’s biggest coffee shop operator, may open its first store in India in the second half of this year as it seeks expansion in the fastest growing major economy after China.

Starbucks will open the stores after forming an alliance with India’s Tata Group by the end of this month, Hameed Huq, managing director of Tata Coffee Ltd., said in New Delhi today. The Seattle-based company signed an agreement in January 2011 to source beans from Tata Coffee.

Starbucks faces competition from Barista Coffee Co., a unit of Italy’s Lavazza SpA, and Café Coffee Day, run by the Amalgamated Bean Coffee Trading Company Ltd. in India, where consumption doubled to more than 100,000 metric tons between 2001 and 2010, the Coffee Board of India estimates.

An agreement that may lead to opening the first store in the first half of this year will be completed this month, Huq said. He didn’t comment on terms of the expected accord.

Tata Coffee’s shares rose 0.6 percent to 863.05 rupees at 12:52 p.m. in Mumbai, while the benchmark Sensitive Index gained 1 percent.

India’s government on Jan. 10 removed the 51 percent limit on foreign ownership of stores selling a single brand, a decision that will benefit companies including Starbucks and Ikea. The new rules require the overseas companies to procure at least 30 percent of their products or inputs from small Indian companies if they own more than 51 percent in the venture.

“We are excited about the great opportunities that India presents to Starbucks,” John Culver, president of Starbucks’s international business said in an emailed statement last week. “We are moving forward with MOU discussions and planning, and hope to make an announcement soon.”