New Delhi, Sept. 17: Did the Union Government succumb to the pressure tactics of the US Government in waiving the mandatory public listing of Coca-Cola in India by way of an IPO (initial public offering) and agreeing to a private placement by the soft drink major? Apparently, it seems so.

And this has been made possible despite the public announcement by the Commerce and Industry Minister, Mr Murasoli Maran, that the entry-level condition of making an IPO must be adhered to.

What seems to have tilted the decision in favour of Coca-Cola, it is learnt, was the direct intervention by Mr William J. Lash, Assistant Secretary for Market Access and Compliance, International Trade Administration division of the United States Department of Commerce, and Mr Robert D. Blackwill, the US Ambassador in India.

Following repeated refusals by the Department of Industrial Policy and Promotion headed by Mr Maran, who insisted that Coca-Cola should be listed, as per the agreement between the company and the Government, to ensure that wealth is shared with the Indian public, the US Ambassador, Mr Blackwill, took up the issue with the Principal Secretary to the Prime Minister, Mr Brajesh Mishra.

This was followed up by the Assistant Secretary in the US Department of Commerce, who took up the issue with the then Commerce Secretary, Mr Dipak Chatterjee.

The US Ambassador, in his letter to Mr Mishra, a copy of which is available with Business Line, wrote: "I would like to bring to your attention, and seek your help in resolving, a potentially serious investment problem of some significance to both our countries. The case involves Coca-Cola, one of the largest single foreign investors in India."

After explaining the backgrounder of the case, Mr Blackwill wrote that "It seems to me that in view of India's ongoing economic reforms and considerable efforts to attract and maintain greater levels of foreign direct investment, there should be some flexibility possible in resolving this issue in a way that is acceptable to both sides. I would be happy to provide you with more information on this case if that would be helpful. I hope you can find some time to look into this matter."

The Ambassador's letter was followed up by the Assistant Secretary in the US Commerce Department. The Assistant Secretary, Mr Lash, who visited India in early May this year, wrote to the Commerce Secretary, a copy of which too, is available with Business Line, "Since my return to Washington, another issue has been brought to my attention that I would ask receive your immediate attention. Recent Indian press reports indicate that the Minister of Commerce and Industry Mr Murasoli Maran has turned down Coca-Cola's request for a waiver from a requirement to divest 49 per cent of its India holdings by July 2002. I understand that this is the second time that Coca-Cola's waiver request has been denied. I find this to be very unfortunate, not just for the company but also for India's investment climate."

Mr Lash goes on to add: "When the Indian Government approved Coca-Cola's Indian investment plans in 1997, the divestment condition was part of the agreement. But I believe it is fair to say that the India of 2002 is different from the India of 1997. India has a further five years of economic reform behind it. Many more sectors, including soft drinks, no longer have limits on foreign direct investment. I understand that, in several instances, the Indian Government has recognised these important changes and either has granted disinvestment waivers to foreign companies or allowed them to increase their holdings in India to 100 per cent. Given the current environment, Coca-Cola's request is appropriate and should be granted."

Seemingly, bowing to such pressure, the Government subsequently acceded to Coca-Cola's request for waiving the IPO stipulation.

A section in the Government is disturbed with these developments and feels that this particular incident has sent out wrong signals to foreign investors that agreements with India are not to be honoured in toto.