Corruption follows FDI but these are issues that have to be taken in the stride. Labour laws too are stringent in India although reforms could make the work environment more congenial. India offers absolute and comparative advantage in this sector and the risks are low. Cultural differences do exist between the two nations but since most international chains in India are US-based and have achieved success, there is likelihood of Coffee & Bytes also succeeding in its venture.
A multinational Corporation based in the US – (Coffee & Bytes) – is looking for overseas expansion. It has presence in a few developing nations such as the UK and Italy and is now seeking to open up in India. C&B specializes in different varieties of aromatic coffee and has budget snacks to go with it. It is based on the fast food concept like Café Coffee Day chains but operations are on a much lower scale. However their interest in India has arisen because of the growing consumerism in the country in the past decade.
Global retailers are interested in India because of its geographic advantages, its versatile demographics and a growing economy with a stable government (Article Base, 2009). The prospects for food chains in India is high because unlike the developed countries where fast food is seen as functional, in India, the idea of eating out is still aspirational (Mitra, 2009). Eating out in India is still a family activity and family entertainment. The demand for fast food in India is growing as more nuclear families have come up and look for fast readymade food (Kulkarni & Lassar, 2009). However, the local government has been trying to promote healthy eating and hence the multinational chains have been alerted.