Coca-Cola forced to abandon India bottling plant plans

Coca-Cola has been forced to abandon plans to build a new bottling plant in India's southern state of Tamil Nadu after fierce resistance from local farmers, who feared that the US-based beverages company would use local groundwater for its fizzy drinks and cause a precipitous fall in the water table.

The cancellation of the proposed $81m bottling plant at Perendurai is the second big recent setback for Coca-Cola as it seeks to expand capacity in the world's second most populous country, where water scarcity, and a plummeting water table, is a growing concern in rural areas.

Last year, Coca-Cola was forced to mothball a new $24m bottling line at an existing bottling plant in Medhiganj, in the northern state of Uttar Pradesh, after it failed to gain permission from the Central Ground Water Authority to operate it, amid protests from local farmers.

Coke is also locked in an ongoing legal battle against Uttar Pradesh authorities over whether it can still operate its older bottling line at Medhiganj.

Coca-Cola's recent run-ins with local farmers anxious about the company's impact on the water table are a hint of the difficulties that the company is likely to face as it pursues an ambitious expansion plan, which it hopes will make India - with its huge, increasingly affluent population and scorching heat - into one of its largest markets.

"India is one of the most water stressed countries in the world, and it's not going to be easy for Coke to grow here," said anti-globalisation activist Amit Srivastava, co-ordinator of the India Resource Centre.

"The water needs of the farmers need to be met first before some company traipses in and starts sucking up the groundwater and makes huge amounts of money."

Coca-Cola has announced plans to invest $5bn in India between 2012 and 2020, and has said that the country could be one of its five biggest markets in the next few years. But India's worsening water shortages - and the highly emotive politics over access to water - will be a challenge for the company as it seeks new locations to boost its production capacity.

Once India's top soft-drink brand, Coca-Cola was forced out of the country in 1977 after it refused to reveal its secret formula, and reduce its equity stake, as part of a wave of nationalistic action against foreign companies at the time.

But Coke has had a difficult time since its 1993 return to India. In 2004, it was forced to stop operating a bottling plant in Kerala, after it was accused of depleting the local groundwater table, and dumping toxic effluent.

Hindustan Coca-Cola Beverages, the company-owned bottling arm, signed a lease for 71 acres of land at a state-owned industrial estate at Perendurai in January 2014.

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In a statement, Coke blamed the state agency for "inordinate delays" and said that it was requesting that the state government refund its money. But it said it still hoped to find other sites in Tamil Nadu where it could invest.

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