INDIA BUSINESS WORLD - AUGUST 2006
THE MONTH THAT WAS...

COLAS SHOWN DOOR IN K'TAKA, KERALA

IN A MOVE that could impact FDI inflows, Kerala and Karnataka on Wednesday joined four other states in banning Coca-Cola and Pepsi, following the pesticides controversy. While Kerala announced a blanket ban on the production and distribution of the two soft drinks, Karnataka banned them from schools, colleges and hospitals. The latter joins Gujarat , Madhya Pradesh, Rajasthan and Chhattisgarh in enforcing a partial ban.

Karnataka also plans to file a suit against the soft drink manufacturers under the Prevention of Food Adulteration Act, top government officials said. Kerala's decision means that the Coke and Pepsi plants at Plachimada and Kanjikode — scenes of agitations by the Left while in Opposition — will not be able to resume production.

These moves may have wide implications as Coke and Pepsi are seen as symbols of liberalisation and the opening up of the economy since the early 1990s. Coca-Cola was forced to exit in 1977 but re-entered in 1993, while Pepsi entered the Indian market in 1989. The two symbols of Americana are banned in Iran , which has no diplomatic relations with the US .