Cola storm could drive foreign investors away

WASHINGTON: The cola controversy raging in India could have a potential fallout on the country’s investment scenario, US government and business leaders have warned.

The clamour against Coke and Pepsi, which made the soft drink giants suffer a publicity nightmare, is being seen as a reminder that despite more than a decade of economic reforms, India remains a hazardous place to do business.

“This kind of action is a setback for the Indian economy,” Franklin Lavin, US Undersecretary for International Trade, said. “At a time when India is working hard to attract and retain foreign investment, it would be unfortunate if the discussion were to be dominated by those who do not want to treat foreign companies fairly,” he said.

“I’m hoping (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,” 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 higher than acceptable levels of pesticide. The US is India’s largest investment partner, with a 17 per cent share. India’s total inflow of US direct investment topped one billion dollars last year, according to US government data.