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Dunkin' Donuts takes the plunge in India

US-based Dunkin' Donuts, one of the world's largest coffee and baked goods chains, is set to enter India after striking a franchise deal, the company's Indian partner said Thursday.

The announcement came barely a month after US rival Starbucks unveiled a similar partnership with the giant Indian conglomerate Tata to open outlets in the South Asian nation.

Jubilant Foodworks, which already runs Domino's Pizza in India, said in a statement that it had signed a master franchisee agreement with the international subsidiary of Dunkin' Donuts.

The deal envisages the opening of up to 30 retail outlets over the next three years, serving a coffee and donut menu "suited to the Indian taste buds", said Jubilant chairman Shyam Bhartia.

Despite its reputation for tea, India has a long-standing coffee-drinking tradition, particularly in the southern state of Tamil Nadu where it is often brewed overnight, then mixed with milk and sugar before being served.

But old-school cafes like the 53-year-old Indian Coffee House chain, which popularised south Indian filter coffee, are now struggling to make a profit while hipper, Western-style chains are opening outlets every month.

The change in tastes has less to do with a fondness for Italian espresso, say analysts, and more to do with the social cachet conferred by the beverage in class-conscious India.

Foreign companies' entry into India's retail sector remains a sensitive issue as small shopkeepers fear being driven out of business by multinationals.

Announcing its tie-up with Tata Coffee last month, Seattle-based Starbucks said it would source beans from south India and roast them locally. The first store is expected in six months.

Cafe Coffee Day, a unit of Amalgamated Bean Coffee Trading, and Barista Coffee, owned by Italian coffee company Luigi Lavazza, are the larger among the 10-15 coffee chains currently operating in India.