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Friday, August 11, 2006

Coke, Pepsi Face Further Bans in India

by Rajesh Mahapatra

Two more Indian states banned the sale of Coca-Cola and PepsiCo soft drinks at government-run schools and colleges over allegations they contain high levels of pesticides.

Meanwhile, India's top business groups warned Thursday that the country's investment climate could be hurt by the states' actions and urged that the decisions be reversed.

So far, seven Indian states have banned the sale of Coke, Pepsi, Sprite and other brands from Coca-Cola and PepsiCo at government-run schools, colleges and hospitals after a New Delhi-based research group said last week that the soft drinks have pesticides levels that far exceed national standards.

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And two more Indian states, Punjab and Arunachal Pradesh, said Thursday they were looking into the matter.

But the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry — which together cover more than 90 percent of Indian businesses — said the moves could hurt the broader economy, slowing foreign investment into the country.

The business groups were particularly disturbed by the decision of the southern state of Kerala, which said Wednesday it would impose a total ban on sale and production of soft drinks by the Indian subsidiaries of Coca-Cola Co. and PepsiCo Inc.

Both companies — The Coca-Cola Co., which is based in Atlanta, and PepsiCo Inc., headquartered in Purchase, N.Y. — operate plants in Kerala.

"Without following the due process of law, it is unfortunate that (state) governments have started taking action," said FICCI President Saroj K. Poddar. "If we do that ... it could create a lot of uncertainty about India and will impact India's investment climate."

Poddar said he would urge Kerala's chief minister to review the decision.

R. Seshasayee, president of the Confederation of Indian Industry, said the states' actions failed to provide due process of the law.

Both Poddar and Seshasayee said the states should have conducted their own tests and then followed proper procedures, such as sending notices to the companies, before announcing the ban.

Still, India's Supreme Court already has asked Coca-Cola India and PepsiCo India to disclose the ingredients of their soft drinks in six weeks.

Many Indian parents welcomed the ban.

"It is a good decision. My children have been addicts of Pepsi and Coke. Now, I can teach them how to drink water," said Molly Kurian, a housewife in Cochin, Kerala's port capital.

Sales of the two companies have been hit since the Center for Science and Environment said last week that its tests on 57 samples of soft drinks made by the two companies revealed they contained residues of pesticides 24 times higher than the Indian standards.

CSE said almost all soft drinks sold in India contain high levels of pesticides, but the focus was on Coca-Cola and PepsiCo because the two account for nearly 80 percent of India's $2 billion-plus soft drink market.

Seshasayee of the Confederation of Indian Industry said the standards cited by CSE were part of a government "proposal" that has not yet been adopted.

Coca-Cola and PepsiCo officials in India continue to avoid speaking to journalists on the issue.

Kari Bjorhus, a U.S-based spokeswoman for Coca-Cola, said the company is "disappointed that the government (in Kerala) would make a decision like that based on inaccurate information."

She added: "Our products are perfectly safe and there is no reason to take them away from consumers."

This is not the first time Coca-Cola and PepsiCo have faced charges in India of excessive pesticides in their soft drinks.

Three years ago, the Center for Science and Environment made similar allegations. At the time, Coke and Pepsi sales declined for a while, but then recovered as the controversy waned.

"For three years we have looked very hard at this and engaged the best scientific minds in the world, and all of the data and all of the science point to the fact our products in India are absolutely safe, just as they are elsewhere in the world," said Dick Detwiler, a New York-based spokesman for PepsiCo's international division.

Copyright © 2006 The Associated Press


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source:
Coke, Pepsi Face Further Bans in India

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