FIPB defers PepsiCo's stake dilution application

NEW DELHI: The fate of cola giant PepsiCo's request for exemption from mandatory divestment of 49 per cent in its India operations has been kept hanging with Foreign Investment Promotion Board (FIPB) deferring the proposal today.

In 1997 Pepsi had made a commitment that it would divest 49 per cent stake in its Indian operations to domestic shareholders in five years.

"The condition was imposed on the company by the Ministry of Food Processing and any decision on waiver could be taken with its consent. As representatives of the ministry were not present, the decision was deferred by FIPB," sources said.

The five-year period has passed and now the company has requested the government to withdraw the condition as at present 100 per cent FDI is allowed in food processing.

"In view of the relaxed FDI environment...Pepsico, in a letter to the FIPB, has explored the possibility of relaxation in the conditions imposed in 1997," the company said in a statement.

The same condition was imposed on Pepsi's rival, Coca Cola. Atlanta-based Coca Cola had to comply with norms by off-loading 49 per cent in its bottling operations in 2002. Later, however, it bought back the shares from the domestic investors.

The government has decided to look at the precedent set in the case of Coca Cola before taking a decision, sources said.