WASHINGTON: As Coca-Cola and Pepsico lose their fizz in India, the US government and business leaders are warning of potential fallout on investment in the booming country of a billion-plus people.
The soft-drinks giants are suffering a publicity nightmare in India after an environmental group alleged that their sodas contain toxic levels of pesticides, leading to full or partial bans in six Indian states.
The clamour against Coke and Pepsi has been an unwelcome reminder to some in the US that despite over a decade of economic reforms, India remains a hazardous place to do business.
“This kind of action is a setback for the Indian economy,” Undersecretary for International Trade Franklin Lavin said. “In a time when India is working hard to attract and retain foreign investment, it would be unfortunate if the discussion were dominated by those who did not want to treat foreign companies fairly.”
The drinks giants have hit back with a barrage of press statements and publicity campaigns in India to insist that their beverages are perfectly safe.
It is not the first time that the pesticide row has arisen over the sodas, and some observers note that the states that have banned them are run by communist and other parties opposed to India’s Congress-led government.
“So I’m hoping that (US) companies don’t use this as a measure to decide whether to invest in India,” said Kiran Pasricha, the US head of the Confederation of Indian Industry (CII).
“I see it as local politics in the Indian context. Investors have to see the bigger picture. We hope that better sense will prevail,” she said.
Coca-Cola and Pepsico have been under fire since the New Delhi-based Centre for Science and Environment said 11 of their drinks contained average pesticide levels that are 24 times higher than limits agreed by India’s government.
Those limits are not yet law, the US companies note, while insisting that their drinks conform to all safety standards applied not just in India but in the European Union, the toughest in the world.
“The Coke you drink in India is as clean as the Coke you get in Paris,” Coca-Cola Asia group communications director Kenth Kaerhoeg said.
India’s Supreme Court has given the companies’ Indian arms six weeks to reveal the ingredients of their drinks. Coke and Pepsi account for four-fifths of India’s $2bn soft-drinks market.
The beverage giants have yet to say whether they intend to comply with the court order. But for a company that guards its product specifications as jealously as Coca-Cola, it looks a tall order.
Both Coca-Cola and Pepsico were forced out of India in 1977 by a socialist government that objected to a lack of local investors and an unwillingness to share technology such as Coke’s top-secret formula.
The 16-year ban ended in 1993, two years after India launched ambitious economic reforms to prise open its closed economy and so start catching up with rival China’s stellar growth.
The US is India’s largest investment partner, with a 17% share. India’s total inflow of US direct investment topped $1bn last year, according to US government data.
Coca-Cola’s statement came a day after two leading Indian industry bodies, including the CII, criticised the state bans as potentially harmful to India’s investment image abroad.
“We would like this to be resolved as soon as possible before it does have any impact, before it does take on proportions that would have repercussions on India,” Pasricha said. – AFP |
