Coca-Cola Plant May be Forced to Close in Kerala
V.M. Thomas
Associated Press
June 23, 2004

COCHIN, India - A Coca-Cola plant in southern India may be forced to close permanently because a village council has accused it of depleting local groundwater and is refusing to renew its license, a company official said Wednesday.

The Atlanta-based soft drink giant stopped production in March at its plant in Plachimada, a village in southern Kerala state, after the state government ordered the company to stop using the groundwater until monsoon rains started in June.

The village council said the plant had caused severe groundwater depletion, drying up wells, ponds and canals.

The three-month ban on the use of water expired on June 15. But the factory hasn't resumed production because the village council has declined to renew the plant's operating license, said Vijay Bhaskar Reddy, a Coca-Cola Co. communications manager.

The factory is one of the largest among the 27 plants Coca-Cola operates in India. It makes mineral water and soft drinks, including Coca-Cola and Thums Up.

"We want the company to shut down the plant permanently," village council president A. Krishnan told The Associated Press on Wednesday. "The Coke plant has only destroyed the water system of the village."

He said the council would not approve another five-year permit.

American companies Coca-Cola and IBM were expelled from India in the 1970s when a socialist government feared the big multinationals would establish monopolies. The companies resumed operations in India in the 1980s after the return of the Congress party government.

Coca-Cola has been fighting with the village council for more than a year, and the case is pending before the state High Court.

"We fail to understand why we are being targeted by the village council. There are several other industrial units in the region that also use groundwater, but get their licenses renewed," Reddy said.

Reddy said Plachimada, 95 miles north of Cochin, Kerala's commercial hub, has received abundant rain this month and there is no scarcity of water.

He said the company would fight what he called "discrimination and injustice."

A Coca-Cola Employment Protection Committee, formed by some 300 out-of-work plant employees, has urged the state government to help reopen the factory.

"There are thousands of people who indirectly benefited from the Coke plant here," said Thennilapuram Radhakrishnan, a spokesman for the workers.

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