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Forum: Coca Cola in India--Run Dry By Multinationals?

March 2006
Forum: Coca Cola in India--Run Dry By Multinationals?

When a country opens its doors to economic liberalization, does it also stand to let in the devil, albeit disguised in a fa�ade of economic and social well-being? In the early 1990s, India began treading the path to globalization, warily at first and then as the accolades began to mount she picked up steam. Today, foreign institutional investors in India are bullish about her stock markets. Perhaps, because they see a burgeoning market for multinational wares very clearly.

The face of urban young India is often dressed in Levis jeans and a Lacoste T-shirt, with feet donning a pair of Nikes, a Calvin Klein jacket slung casually over the back, and Ray-Ban shades completing the picture--a well-dressed effigy endorsing globalization that has multinational corporations (MNCs) laughing all the way to the bank.

It is true--no longer do Indians have to beseech their relatives overseas to bring this, that, and the other, since every global corporation worth speaking of has entered the Indian market or is in the final process of inking a deal with a partner with whom to join the foray. The early response from the Indian public, starved of choice at the marketplace, has been welcoming, not only for the variety goods that multinationals have introduced but also because they laud the employment generated by these new well-paying masters. Income levels of a salaried Indian middle-class have never been so high, yielding a new class of Indians who are pro standards, ISO certifications, internationalism, in short, they are on the move.

And as long as they are happy, their habits trickle down slowly to the hinterlands and the Indian government continues to court multinationals for their investment. On the surface, this is not a bad thing. The lure of lucre or in better words, the quest for a better lifestyle is a worldwide phenomenon that has now taken much of Asia by storm. The opening up of the Indian economy has ushered in high growth rates and a newfound awareness and self-respect among Indians globally.

However, there is a flip side to every success story. In this case, the Indian government has apparently allowed MNCs entry to a level playing field without a proper policing system in place--no, not to check tax evasions and financial irregularities, for this has been well taken care of--it is the natural environment in which these corporates function that is often the worse for their entry.

Irrespective of whether a multinational has a partner or is going solo, it goes without saying they have an investment potential that exceeds that of the existing inhabitants of areas around their plants. In spite of this, policy-formulating political and economic circles have possibly ignored the fact that what an MNC pays for the use of India's natural resources is a pittance, especially when compared to the problems that occur as a fallout of their presence.

Take Coca-Cola, for example. It re-entered India in 1993 after a gap of 16 years, investing $1 billion, and now employs directly approximately 10,000 people, and indirectly creates employment for more than 125,000 people in related industries through its vast procurement, supply, and distribution system.

How have they fared? They haven't done too badly. India's packaged water industry had grown to a Rs. 8 billion ($170 million) market in 2002, with leading brand names such as Coke's Kinley, Pepsi's Aquafina, and the Indian bottled water giant Parle's Bisleri estimated to enjoy half or Rs. 4 billion ($85 million) of the market. It was expected to grow to Rs. 12 billion ($250 million) by 2004. Actually, the Parliament of India's "Report of Joint Committee on Pesticide Residues in and Safety Standards for Soft Drinks, Fruit Juice and Other Beverages" (dated before 3/04) said that the soft drink industry had an annual turnover of Rs. 6000 crores (Rs. 60 billion, 1.25 billion dollars) 5 times as much as expected for the packaged water industry. Considering how large these numbers are, we can certainly say that consumption has exploded.

No wonder, considering the aggressive advertising campaigns that have been put in place, featuring leading Indian actors and sports icons supporting the brands. But how many people know that in many of India's villages around Coca-Cola's bottling plants, an agitation to force their closure has gained momentum over the last five years.

The reason for the agitation?

Water shortage: In a country where one third of all villages are without adequate water and shortages are growing daily, bottling plants use deep bore wells, take water away from farming, and are even planned in areas where local leaders cite a lack of drinking water for the populace. Many villagers affected are struggling Adivasis and Dalits.

Deteriorating water quality: The more rapid water flow pulled by the bottling plant can break up limestone or clay, making groundwater hard, difficult to use, and unpleasant to taste, often brackish or milky.

Contaminated by products: Plants give waste sludge to the communities for use as fertilizer, but an investigation by BBC Radio 4's Face The Facts resulted not only finding the sludge useless as fertilizer, but also finding dangerous levels of a known carcinogen, cadmium.

Pesticides in bottled drinks: The Joint Parliamentary Committee found the Centre for Science and Environment (CSE) findings to be correct on the presence of pesticides in bottled drinks. It noted that "despite the low consumption of pesticides, India has more problem of pesticide residues vis-a-vis other countries and these have entered into food products and underground water." Long term consumption of pesticide can cause reproduction disorders and cancer and is linked to cerebral palsy and congenital neurological disorders.

Junk foods endangering health: The ability of a large company to flood a country with advertising has created the perception that high consumption of the product is a modern, western, attractive, and/or healthy practice. In contrast, the emerging medical view is that high consumption of carbonated beverages is a major factor in the development of lifestyle-related conditions and diseases such as obesity, diabetes, esophageal cancer, and, of course, dental decay from sugar and erosion from acid, for example. Furthermore, other major ingredients of soft drinks such as carbon dioxide, certified sweetners like aspartame, saccharine, and acesulfame-K, and flavoring agents have also been linked to health problems. Australia and China have restricted the use of caffeine. Alexander Cockburn has written: " In an experiment where rats were dosed on Coca-Cola the tests readings weren't pretty, starting with ‘short, swollen, ulcerated and broken villi in the intestine and severe nuclear damage'."

These issues, as well as reported violence against union leaders at bottling plants in Columbia, South America, have prompted students in American universities to involve their administrators in review of contracts with Coke. At least eight colleges and universities have not renewed Coke's exclusive beverage contract, including the University of Michigan (where deliberations went on for ten months), Rutgers, Union Theological Seminary, SUNY-Buffalo, and Oberlin, for example.

Meanwhile, in India, integrated policies and legislation both for the conservation of groundwater and for the quality of beverages have been slow in coming.

There is no going back on globalization--India has a bright future ahead of her that has place for every credible corporation seeking a share of her huge tapped and as yet untapped market. And demonizing companies is unfair, however, a well-informed citizenry should require businesses to operate ethically. Both businesses and consumers should see the big picture and keep wants and needs in perspective. We can advocate a thorough assessment of the situation and prudent measures to conserve natural resources and the health of the people. Further opening of the economy should be based on judicious development of the country. It's time Indians are also known for their love for all that their country holds within it--natural resources and people.


Case of the Coke bottling plant at Plachimada in Kerala

Plachimada is fairly close to reservoirs and irrigation canals, so the primarily agricultural belt suffered from no groundwater scarcity, that is, until the Coke plant was set up. "Barely six months after the factory set up, villagers and farmers living around the bottling unit began noticing changes in the quantity and quality of well water. Water from a well in Plachimada, a tribal colony with nearly 100 families living along the eastern wall of the factory, rapidly turned brackish and milky white in color. The water was unfit for drinking, cooking and bathing."

How true is this claim? CorpWatch India sent samples of water from Plachimada wells for scientific analyses at a Chennai-based government-approved laboratory. Dr. Mark Chernaik, a staff scientist with Oregon-based E-LAW US, a network of public interest environmental lawyers, interpreted the analysis and explained the problems with the high level of dissolved calcium and magnesium and the mechanism of change in water quality.

Then, when the available water reduced, Coke resorted to buying water sourced from wells in neighboring villages, thus adding to the woes of more village people. Furthermore, waste from the effluent treatment plant of the company was polluting water in the nearby panchayat wells. The battle is more than three years old now, with Coca-Cola winning cases in both the Kerala High Court and the Supreme Court. However, Health Minister K.K. Ramachandran said in October 2005 that the Government "would not allow the bottling plant of Hindustan Coca-Cola Beverages Pvt. Ltd. at Plachimada to reopen against the will of the people."

Case of pesticides in Coke

On August 4, 2003 the Centre for Science and Environment (CSE), a non-governmental body, announced that it had conducted tests which showed that Coca-Cola's soft drink products had 30 times the level of pesticide residues permitted under European Union regulations. The CSE tested 12 soft drinks, including Coca-Cola, and found toxins such as Lindane, DDT, Malathion and Chlorpyrifos--pesticides that can cause cancer and a breakdown of the immune system. The CSE claimed it had tested the same products in the USA and found no such residues, prompting its director Sunita Narain (recent recipient of the World Water Prize in Stockholm) to say, "These companies take advantage of the fact that India has no regulations governing the quality of water that goes into soft drinks."


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