U.S. warns of cola ban fallout on investment

NEW DELHI: Close on the heels of a U.S. trade mission visit to India, the U.S. undersecretary for International Trade, Franklin L. Lavin, who is leading the mission ha expressed fears that the ban is a setback for the Indian economy.

The soft drink giants Coca-Cola and Pepsi are facing full or partial bans in six states in India over allegedly high pesticide content and the clamor has been an unwelcome re- minder to some in the US that India, despite more than a decade of economic reforms, remains a "hazardous" place to do business.

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"At 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 don't want to treat foreign companies fairly," he said.

Coke and Pepsi have been under fire since the New Delhi-based Centre for Science and Environment (CSE) said 11 of their drinks contained average pesticide levels that are 24 times higher than Indian standards.

Those limits are not yet law, the US companies have noted, while insisting that their drinks conform to all safety standards even in the European Union, which has the most stringent requirements.

"The Coke you drink in India would be as clean as the Coke you get in Paris," Coca-Cola Asia group communications director Kenth Kaerhoeg said.

While the soft drink MNCs have hit back with a barrage of press statements and publicity campaigns to insist that their beverages are perfectly safe, Kiran Pasricha, US head of the Confederation of Indian Industry (CII) hopes that US companies don't use this controversy as a measure to decide whether to invest in India .

The US is India's largest investment partner, with a 17 percent share. India's total inflow of US direct investment topped $ 1 billion last year, according to US government data.

Coca-Cola's statement came a day after two leading Indian industry bodies, including CII, criticized the state bans as potentially harmful to India's investment image abroad.

"We'd like this to be resolved as soon as possible be fore it does have any impact, before it does take on proportions that would have repercussions on India," Pasricha said.