Brewing hot! Coffee stocks rally 3-9% on hopes of 100% FDI

Shares of coffee stocks are rallying on hopes of getting foreign funds. Tata Coffee, Tata Global Beverage, CCL Products and Bombay Burmah jumped 3-9 percent on Tuesday.

The government may allow foreign direct investment (FDI) in rubber and coffee plantation sectors with an aim to attract more FDI into the country.  A proposal to this effect is under consultation of the commerce and industry ministry, sources said. Currently, 100 percent foreign investment is permitted through the government approval route in the tea plantation sector. However, FDI is not allowed in any other plantation sector or activity.

According to sources, foreign players could be allowed to engage in rubber and coffee plantation, engage labourers in plucking of coffee beans or collecting latex from rubber trees and processing of the raw material. Permitting foreign investment will also help India reduce import bill of rubber and boost India’s coffee exports, they said.

To boost domestic production of the crop, the government is in the process of formulating a national rubber policy. Total rubber consumption by various industries, including tyre manufacturers, stood at 10,18,000 tonnes in 2014-15, 3.7 percent higher than the previous year.