Cola citizenship

In the recently released film, Corporate, the US partner of a firm accused of selling soft drinks that have pesticide residues, says: You may be the finance minister of the country, but if you don't make this controversy go away, I'm going to withdraw all my investment. In the movie, a worried finance minister calls up the local politician in Maharashtra who's driving the pesticide campaign and asks him to stop it since the investment implications are substantial. Real life, of course, is different, so it is unlikely that P Chidambaram or anyone else will take seriously the threats made by the US undersecretary for international trade, Franklin Lavin. Mr Lavin has said that the action taken against the cola firms, after the Centre for Science and Environment found pesticide residues in their products, could affect investments from the US into India. "This kind of action is a setback for the Indian economy," he is reported as having said to the news agency AFP.

The bans on cola companies in half a dozen states are of course unwarranted and may well be illegal, because the products are being manufactured with government permission and are not violating any existing regulations. But they are more a setback for the companies concerned than for the Indian economy, and the lesson therefore has to be learnt by the cola companies-which have been resisting the stipulation of product standards that would have protected them from arbitrary bans.

In any case, Mr Lavin should check his facts, because the executive director of the American Chamber of Commerce, which represents the leading US companies doing business in India, has been reported as saying the opposite of what Mr Lavin believes: the ban will not impact investments at this stage! That stands to reason, why would a GE lose a chance to tap the Indian market just because Coca-Cola's products are being asked to meet certain standards? Some observers have insinuated that the firms are being targeted for being American, but there are no cola producers of any significance that are not American. And before the CSE did its first tests on bottled soft drinks three years ago, it did similar tests for bottled water, and Indian brands like Bisleri and Bailley were among those named for producing sub-standard products. In short, people should forget conspiracy theories and macro-repercussions, and focus on the job at hand, which is specific regulation that is eminently feasible.

It is worth bearing in mind that, till some time back, the same firms that are now parading British test findings were arguing that it was simply not possible to deal with pesticide residues in complex products such as theirs. Indeed, after resisting regulations till the other day, the cola companies find that they are now willing to live with them""they probably see regulations as a lesser evil, if the alternative is an outright ban. Greater consistency in the stands they adopt would improve their credibility. The companies and others are of course right in arguing that India needs to set proper standards for other products such as milk and apples, but that doesn't make the case against the cola firms any weaker. All of which points to the central fact, that the real job is in the hands of the government, which needs to notify the standards, something it has failed to do so far, and also carry out its own tests periodically, to make sure that the products meet the stipulated standards.