Monthly Archives: July 2007

History of Coca-Cola in India

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Coca-Cola first entered India in 1956, operating with 100% foreign equity due to the lack of a foreign exchange act at that time. The Indian Foreign Exchange Regulation Act was introduced in 1973 during Indira Gandhi’s tenure. This act required foreign companies selling consumer goods in India to invest 40% of their equity in Indian associates. Although Coca-Cola agreed to invest 40% of its equity in India, it insisted on retaining full control over technical and administrative functions, excluding local participation.

This stance conflicted with the foreign exchange act. Consequently, the government instructed Coca-Cola to either revise its plan or exit the country. In 1976, Indira Gandhi called for elections, leading to the formation of a unified opposition under the Janata Party. The Janata Party came to power in 1977 and demanded that Coca-Cola either comply with the foreign exchange act or leave India. Coca-Cola chose to leave that year.

Following Coca-Cola’s departure, George Fernandes commented:
“Coke had 100% equity in India. Their investment was minimal—Rs. 6,00,000, equivalent to less than $20,000 at the time. From this investment, they repatriated an estimated 250 million rupees (about $8 million) in profit over twenty years.”

In 1993, Coca-Cola re-entered the Indian market, benefiting from new liberalization policies. The revised foreign exchange regulations allowed for up to 51% foreign equity and provided automatic approval for technology agreements in high-priority industries. Foreign investors and companies could now hold up to 100% equity in these sectors, with greater freedom for repatriating capital.

In 1999, Coca-Cola acquired Parle, India’s leading soft drink brand, which included popular beverages like Thums Up, Limca, and Gold Spot. Prior to the re-entry of Coca-Cola and Pepsi, over 50 Indian soft drink brands had emerged, and 200 production plants had been established. However, as Coca-Cola and Pepsi gained market dominance, many indigenous drinks disappeared, and the demand for healthier options declined.

London Law Researcher studies Coca-Cola in Mehdiganj

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I worked with a law researcher from the University of London as both an assistant and translator. He was interested in the legal aspects of the Coca-Cola issue. Having lived in India for over a year, he knew some Hindi, but not well enough to conduct interviews on his own. He is the president of an NGO called Glocality International, which has offices in London and New Delhi. I worked with him for three days in Varanasi.

Tyler was also involved in some high-profile international law cases. For instance, he and a colleague had sued seven Chinese ministers, including the President and Prime Minister, for the deaths of over a million people in Tibet. He explained that the case was registered in Spain because no other country was willing to accept a case against the Chinese government in their courts.

During our time together, we interviewed numerous villagers, Nandlal Master, and several government officials, including the Regional Pollution Control Officer, Ground Water Authority officials, and District Village Committee officers. Tyler was particularly impressed with how Nandlal and his team were leading their movement. Given that Tyler had only three days and wanted to maximize his interviews, we spent one night at Lok Samiti’s office to speak with Nandlal and his colleagues.

We encountered difficulties with the Regional Pollution Control Officer, who believed his English was sufficient to communicate with Tyler, despite Tyler’s advance notice that I would be assisting. The officer often misunderstood Tyler’s questions but remained overly confident in his responses, attempting to obscure the issues. Tyler was determined to gather as much information as possible.

The situation escalated when Tyler used a voice recorder without informing the officer, leading to a heated exchange. The officer, upon discovering the recording, became hostile and threatened us with police intervention. Tyler responded by stating that he would sue the Pollution Control Department in the Supreme Court of India for corruption related to the Coca-Cola issue. He warned that if the Supreme Court confirmed the corruption, the officers could face jail time, which only intensified the officer’s anger.

Eventually, we left the office, laughing about the tense encounter with the irate officer. It was quite amusing to see a PCS officer so angry but unable to act against us. In contrast, the District Village Committee Officer was very engaged and eager to discuss the Coca-Cola issue. He shared extensive information about the situation and the role of Village Committees, and he promised to provide all necessary documents and support. He was the first government official I had met who seemed genuinely interested in talking to people, possibly due to his interest in conversing with a foreigner.