The US government and business leaders have warned India that the ban announced on sale or manufacture of soft drinks produced by Coca-Cola Co and PepsiCo Inc in India, could result in a possible decrease in its investment in the country.
Undersecretary for International Trade, Franklin Lavin said that this kind of action was a setback for the Indian economy. "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," he said. Lavin might take up the matter with the government during his trip to New Delhi which is scheduled for this November.
The U.S accounts for nearly 17 percent of share in India's investment market. According to U.S. government data, last years inflow of U.S. direct investment in India was more than one billion dollars.
The controversy blew up on August 3 after an environmental supervisory body claimed that soft drinks produced by Coca-Cola and PepsiCo contained harmful pesticides. The New Delhi-based Center for Science and Environment (CSE) said 11 of their drinks contained average pesticide levels that are 24 times higher than limits agreed by Bureau of Indian Standards. Following this, six Indian states have announced partial or complete bans on the soft drinks, with Kerala imposing a complete ban on production and distribution of cola products and five other states imposing a partial ban on the sale of soft drinks in and around educational institutions, hospitals and government offices.
The Indian Supreme Court has given the Cola giants six weeks to reveal the ingredients used in their soft drinks, so that claims of toxic pesticide levels can be verified using additional tests. Both Coca Cola and Pepsi have rejected the CSE reports, insisting that their products are perfectly safe and meet international standards, a response which is seconded by the Indian Soft Drinks Manufacturers Association. "Our products manufactured in India are absolutely safe and meet every safety standard set by food health and regulatory bodies in India and all over the world," they said.
This is not the first time that a controversy has surrounded the Cola products. Coca-Cola was forced out of India in 1997 after its reluctance to reveal its formula and returned 16 years later in 1993. In 2003, similar pesticide level claims made by CSE on the soft drinks manufactured by Cola companies, reduced sales of their products for a short period, but the issue was soon forgotten.
Kiran Pasricha, who is the US head of the Confederation of Indian Industry (CII) said she hoped that companies in United States would not use this ban as a measure for deciding investment in India. “I'm hoping that (US) companies don't use this as a measure to decide whether to invest in India. 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.
