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Move in India to Ban Coke and Pepsi Worries Industry

New York Times/Saritha Rai
August 15, 2006

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Industry groups in India are concerned that recent bans on Coca-Cola and Pepsi-Cola could harm the country’s image as an attractive place for foreign investment.

At least six Indian states imposed whole or partial bans on Coke and Pepsi after a research group said in a report on Aug. 2 that the soft drinks contained harmful levels of pesticides.

The parent companies, Coca-Cola and PepsiCo, account for more than 80 percent of India’s $2 billion soft-drink market. Each company says that testing proves that its beverages are safe, and the companies have mounted major advertising campaigns against the report.

The bans in India “could send the wrong message to investors at a time when there are vast opportunities for businesses in both countries to work together,” said Prabhakar Bothireddy, president of the Indo-American Chamber of Commerce, a trade group of 2,600 companies based in Mumbai, formerly Bombay.

India, with a population of 1.1 billion, has been a major draw for foreign investors, especially American. Companies in the United States have led the trend in outsourcing jobs, much of it to India, accounting for more than a million positions in this country. American exports to India have doubled in the last four years.

The controversy is occurring as the Bush administration prepares to send a large business delegation to India in November.

Kiran Pasricha, the American-based senior director of the Confederation of Indian Industry, said, “I hope that U.S. companies do not use this as a measure to decide whether to invest in India.”

After the report by the research group, the Center for Science and Environment, a southern state, Kerala, banned all sales of Coke and Pepsi. In neighboring Karnataka state, the government has forbidden the sale of soft drinks in schools, public offices and hospitals.

In 2003, the group said that soft drinks contained unacceptable levels of pesticide. Consumer organizations in India have urged the nation’s government to set stringent standards for pesticide levels, both in soft drinks and in milk and in food including grain. But officials in New Delhi have not yet acted on the report or set limits on such pesticide content.

In Palakkad in southern Kerala, formerly Palghat, people have campaigned to shut down local Coca-Cola operations, asserting that they were draining groundwater. Supporters of the campaign said they were happy that the government had banned the soft drinks. “If both the plants close down, about 800 people will lose their jobs,” said Shaji Karaukaveetil, an organizer of the action against Coke, “but millions of lives will be saved as these drinks are not safe.”

Last week, Coca-Cola India said in response to such accusations that an independent laboratory had determined that its soft drinks met European Union safety standards.

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