The Indian subsidiary of Coca-Cola
Co (KO.N) said on Friday it may have to close some bottling plants if the
government pushes through a proposal that will subject fizzy drinks to a 40
percent "sin" tax, as part of a broader fiscal overhaul.
The beverage maker, which operates
57 factories and bottling plants across India, said a proposal to group sugary
sodas with higher-taxed luxury cars and tobacco will hurt demand for its
drinks.
"It will lead to a sharp
decline in consumer purchase," Coca-Cola India said in a statement.
"In these circumstances, we will have no option but to consider shutting
down certain factories."
India's ruling party is trying to
push a national goods and services tax (GST) through parliament to replace a
myriad of state sales taxes and to shake-up government revenue.
Several countries are debating
so-called "sugar taxes" to tackle obesity and encourage healthier
lifestyles. While more than a fifth of India's population lives below the
official poverty line, the country is home to the third-highest population of
obese people after the United States and China, according to medical journal
The Lancet.
The chairman of Coca-Cola rival
PepsiCo Inc (PEP.N) in India said in a statement that while he supported GST,
the 40 percent rate was "high".
"Having said that, we are
confident that the government will take a balanced view of taxation with
respect to our industry," Shiv Shivakumar said.
Coca-Cola India, which employs
25,000 people, is on course to invest $5 billion by 2020 as it looks to
raise production to target a growing middle class.
The company re-entered India after
economic liberalization in the early 1990s.
edited from VOA and Reuters
