December 11, 2015: The Coca-Cola Company believes in India and identifies it as one of its strategic growth markets. The Coca-Cola system in India has already invested more than USD 2.5 BN, establishing raw material supply chain from farmers and producers, in setting up 57 factories, supporting 30 lakh retailers and 7,000 distributors and in creating direct and indirect employment for more than 200,000 people. Our system is on course to invest another USD 5 BN in India by the end of 2020.

For instance, we have opened three Greenfield sites over the last 20 months, 2 of which have been commercialized over the last 12 months.

Much like all other business enterprises operating in India, we expect the Indian GST to bring about a leap forward and create a much cleaner, unified, taxation system that propels the India growth story forward. The Arvind Subramanian Committee on GST, has also articulated this in their recommendations. It suggests that “the GST should aspire to a single rate, which would then also be the standard rate.” However, it also recommends a demerit / sin rate of 40% within the GST and advocates the inclusion of aerated beverages in that category.

This is not in line with the “Make in India” program launched by the Govt. of India, which recognizes “Food Processing” as an important sector within the program and specifically mentions our industry under the line item category of “Consumer food: packaged food, aerated soft drinks, packaged drinking water and also Beverages: fruit-based and cereal-based.”

An acceptance of the Arvind Subramanian committee recommendations with regard to GST rate of 40% on aerated beverages, will have a negative ripple effect on the entire beverage ecosystem, thereby affecting lakhs of retailers, thousands of distributors, transporters, cold drink equipment manufacturers, farmers and producers of raw materials for the beverage industry and the entire forward and backward supply chain systems. It will lead to a sharp decline in consumer purchase, and for a demand driven industry, it will mean a significant rationalization of manufacturing capacity. In these circumstances, we will have no option but to consider shutting down certain factories.

Ishteyaque Amjad, Vice President, Public Affairs & Communication
Coca-Cola India and South West Asia