New Delhi: The government is likely to waive the disinvestment clause, which requires a foreign company to offload 49% equity in favour of Indian shareholders, in the case of beverages major Pepsi India.
Official sources said the issue would be taken up by the Foreign Investment Promotion Board (FIPB) on Friday. They added that the board may give its clearance to waive the divestment clause as the Ministry of Food Processing and Department of Industrial Policy and Promotion have given their consent.
“Since the ministries concerned have given their nod, we have no problems in waiving the clause that requires Pepsi India to divest 49% of its equity in bottling operations acquired by local bottlers, said official sources.
At the time of entry in India, the multinational company had agreed to offload 49% of its equity in favour of Indian shareholders within a stipulated time period which was later extended by the government.
However, the policy was later changed permitting foreign companies to take 100 per cent stake in the food processing and other sectors.
FIPB had deferred the issue of Pepsi India in June last year as the Ministry of Food Processing had not given its clearance for waiving the clause, under which Pepsi India had to divest 49 per cent stake mainly in favour of its bottlers.
The sources said the FIPB would take a decision on the multinational’s application in the context of a similar request made by Coca-Cola in 2002.