|
More bans are expected in the coming days in a political backlash against the US companies that has the potential to disrupt flows of US and other foreign investment to India.
The US has urged Manmohan Singh, India's prime minister, to take the lead in resolving the crisis, according to one person close to the situation.
"There's been government contact and there's going to be more government contact because the potential impact this could have on the investment climate is very serious," he said.
"These are world-class and symbolic US companies getting kicked."
Andhra Pradesh and Karnataka, two southern states, on Thursday joined Rajasthan, Gujarat, Madhya Pradesh and Chattisgarh in banning the sale of Coca-Cola and Pepsi products in and around publicly-funded schools and government offices.
Kerala, a southern stronghold of the Communist Party of India (Marxist), on Wednesday became the first state to impose a total ban on the making and selling of the cola majors' products.
"We have decided to ban the production and distribution of Coca-Cola and Pepsi with immediate effect," said V.S. Achuthanandan, Kerala's new chief minister and an 83-year-old Communist party stalwart.
The states acted after a Delhi-based organisation - the Centre for Science and the Environment - last week released a report showing Indian colas contain on average 24 times permitted pesticide levels.
But the two companies say they are victims of a campaign by opposition and leftwing parties to embarrass a Congress government for cultivating close ties with the US.
Industry analysts said most Coke and Pepsi products are consumed in India's biggest cities - Delhi, Mumbai, Kolkata and Chennai - which have yet to be directly affected by the bans.
Coca-Cola and PepsiCo have run advertisements in newspapers saying their drinks are safe and conform to global and Indian standards, but have otherwise refused to comment on what they say is an industry-wide matter.
Coke has 60 per cent of the market, compared to 38 per cent for Pepsi and 2 per cent for local producers.
Both groups say their colas contain insignificant levels of pesticides - present in the groundwater used in soft drinks - compared to those found in milk, eggs and most meats.
B. Prabhakar, president of the Indo-US Chamber of Commerce, said the bans will "send the wrong signal to companies thinking about investing in India".
.........................................
FT Syndication Service
|