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Rediff.com  » Business » Is the ban on Pepsi and Coke justified?

Is the ban on Pepsi and Coke justified?

August 14, 2006 17:29 IST
This story is about the takeover of Apollo Hospital in Sri Lanka by a local corporate raider. The Sri Lankan Board of Investment has issued a statement that, in the event of the takeover succeeding, the company, under new management, would not be entitled to the tax and duty concessions granted to the Apollo project, and would also have to pay the current market price for the land.

Apollo Hospital is an Indian-owned company and the BoI rulings followed the Indian high commissioner's taking up the matter. The high commissioner argued that such a takeover would affect Indian and foreign investments in Sri Lanka "very negatively".

In contrast, Delhi's silence on the ban placed by the Kerala government on Pepsi and Coke on producing and marketing soft drinks, is deafening. Does the Foreign Investment Promotion Board, for instance, agree with such discriminatory actions against foreign companies?

Does the ministry of commerce, which is in charge of our WTO agreements, see nothing wrong in the event? The ban on Coke and Pepsi was the result of a claim by the Centre for Science and Environment, Delhi, that the pesticide residue, which is harmful to humans, in the samples of Coke and Pepsi soft drinks it tested, was well in excess of the level permitted in the draft standards on the subject.

It should be noted, first, that these are draft standards, not yet having regulatory force. Second, the ban is only on two well-known multinationals, which are symbols of globalisation, with not a word about similar action against other producers of soft drinks or, indeed, other products as well.

While the concern about the pesticide residue affecting the health of the citizens is admirable, surely it cannot be argued that the risk from pesticides in goods produced by domestic companies be tolerable, but not if the producer is a hated multinational - which is what, in effect, the Kerala government is saying. (Incidentally, the chief minister of Kerala had earlier led an agitation against the Coke and Pepsi factories claiming that their use of water was lowering the water tables in the region leading to shortages, a claim thrown out by courts and denied even by the local panchayats).

To my knowledge, Agriculture Minister Sharad Pawar is the only senior politician and minister in the ruling coalition, who had the courage to put the issue in perspective. He stated that given the extensive use of insecticides and pesticides in farming and horticulture, even mother's milk contains such residue - and so is the case with vegetables, fruits and, indeed, drinking water supplied by most municipalities.

But Pawar is an exception, in as much as his political strength comes from grassroots and not from sycophantic loyalty to the family. (Incidentally, he was thrown out from the Congress Party for arguing that a person of foreign origin becoming prime minister would not be palatable, a stand whose correctness the president herself conceded some time later by refusing to become the PM.)

In the pursuit of its anti-MNC ideology, the Leftist government in Kerala also seems to be completely unconcerned about the loss of jobs its actions would result in - in factories, in distribution, in restaurants and so on.

On a different issue, namely that of dance bars in Maharashtra, I thought the government showed an equal lack of  concern about the welfare and employment of the thousands of dancers, waiters, taxi and rickshaw drivers, and so on, who would be rendered jobless (or, in any case, have lower incomes) - its puritanical impulses obviously have priority over such mundane matters. How many of these unemployed will now be tempted to turn to crime or terrorism?

But to come back to MNCs and FDI, contrast the stand of the Sri Lankan BoI with that of most of our political masters and investment promotion bodies. True, the Chambers of Commerce have protested, but what about official bodies? Is it not time that we see the world differently than through glasses coloured by the East India Company, recognise that we are not just recipients of FDI but, increasingly, providers of FDI to the rest of the world also?

Tailpiece: I often wonder whose actions and policies are more calculated to defeat their stated objectives - those of President Bush or of the Left? Bush's war on terror in Afghanistan and Iraq and the all-out support for Israel in the current war in Lebanon, have probably given a greater boost to Islamic terrorists and fundamentalists than any propaganda on Osama bin Laden's part would have achieved.

The Left is committed to investment, growth and employment. It has also signed the Common Minimum Programme, which aims at doubling FDI. And yet, its actions in Kerala, and vetoes on investments in retail, and other sectors, are clearly calculated to frighten investors, and cost growth and employment - as strange a way of achieving its objectives as Bush's politics does make for strange bedfellows.

A V Rajwade
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