WASHINGTON (XFN-ASIA) - The US government and business leaders are warning of potential fallout regarding investment in India, after an environmental group there alleged that beverages produced by Coca-Cola Co and PepsiCo Inc contain toxic levels of pesticides, leading to full or partial bans in six Indian states.
'This kind of action is a setback for the Indian economy,' Undersecretary for International Trade Franklin Lavin told Agence France-Presse.
'In a time when India is working hard to attract and retain foreign investment, it would be unfortunate if the discussion were dominated by those who did not want to treat foreign companies fairly,' he said.
The soft-drinks giants have hit back with a barrage of press statements and publicity campaigns in India to insist that their beverages are perfectly safe.
'I'm hoping that (US) companies don't use this as a measure to decide whether to invest in India,' said Kiran Pasricha, the US head of the Confederation of Indian Industry (CII).
'I see it as local politics in the Indian context. Investors have to see the bigger picture. We hope that better sense will prevail,' she said.
Coca-Cola and PepsiCo have been under fire since the New Delhi-based Center for Science and Environment said 11 of their drinks contained average pesticide levels that are 24 times higher than limits agreed by India's government.
Those limits are not yet law, the US companies have noted, while insisting that their drinks conform to all safety standards applied not just in India but in the European Union, the toughest in the world.
'The Coke you drink in India would be as clean as the Coke you get in Paris,' Coca-Cola Asia group communications director Kenth Kaerhoeg said.
India's Supreme Court has given the companies' Indian arms six weeks to reveal the ingredients of their soft drinks. Coke and Pepsi account for nearly four-fifths of India's two-bln-usd soft-drinks market.
The beverage giants have yet to say whether they intend to comply with the court order. But for a company that guards its product specifications as jealously as Coca-Cola, it looks a tall order.
Both Coca-Cola and PepsiCo were forced out of India in 1977 by a socialist government that objected to a lack of local investors and an unwillingness to share technology such as Coke's top-secret formula.
The 16-year ban ended in 1993, two years after India launched ambitious economic reforms to open its closed economy and so start catching up with rival China's stellar growth.
The United States is India's largest investment partner, with a 17 pct share. India's total inflow of US direct investment topped one bln usd last year, according to US government data.
