India Rebuffs Coca-Cola Bid to Enter Market

Coca-Cola Co. lost its bid to return to India today when the government turned down an application that would have allowed the soft drink maker to compete with domestic producers.

Even a spokesman for Coke’s top competitor, Pepsi-Cola, criticized the move as a return to economic nationalism by India, which in recent years had encouraged foreign investment.

Commerce Secretary S. P. Shukla said Coke’s application to build a $3-million plant in an export zone had been rejected. “The reasons for our move will be explained in a letter to the applicant,” he said.

A spokeswoman for the Ministry of Commerce said “protection of India’s domestic market played a major factor in the decision.”

A request by PepsiCo. Inc. for an additional plant probably would also be rejected, she added, speaking on condition of not being identified in keeping with government practice.

Coke left India in 1977 when it refused to give the government details of its secret syrup formula. An Indian company, calling itself Campa Cola, adopted Coke’s logo but not the taste.

The Coca Cola Co. applied two years ago to manufacture its syrup in an export processing zone.

Under the proposal, only 25% of its output would have been sold in India to local bottlers. As an added incentive, Coke offered to invest in a joint venture in southern India to export tea concentrate to Japan.

Coke’s goal was to break into India’s $350-million soft drink market which is now controlled by three domestic soda companies.