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Coca-Cola Abandons India Expansion Plans Due to Lack of Water

The current factory has sucked up enough groundwater to drop overall levels by 26 feet, and expansion could increase water pollution. 

The world’s biggest beverage maker plans to invest $5 billion in India from 2012 to 2020. (AP Photo/Manish Swarup)

Coca-Cola has been planning a major expansion push in India. The all-American soft-drink maker was hoping to broaden production in the country with a major new bottling plant. But they've now had to scale back. 

Expansion was focused on a large factory in Mehdiganj, near Varanasi, India. Though the deal seemed mutually beneficial to locals and the brand initially, Coca-Cola soon came up against regulatory issues—and protesters. The plant requires heavy water supplies, and that's meant drilling into groundwater reserves. Since the plant opened, groundwater levels have dropped 26 feet. Protesters call this an "over-exploitation of ground water."  

The Mehdiganj plant first opened in 1999, and the expansion has been tagged at an additional $25 million. While this money would certainly boost the local economy, the environmental dangers were too much for many locals. The protests have been going on for almost a year, as activists urged the government to dismiss the expansion out of water-pollution concerns.

Hindustan Coca-Cola offered this statement to Alok Ranjan, the Chief Secretary of the Uttar Pradesh government, as obtained by Economic Times: "Due to inordinate delay in receiving of the no-objection certificate, causing delay in expansion of capacity, leading to financial losses, we have decided not to pursue the expansion at Varanasi." 

The India Resource Center, which has led the protests, was thrilled. "We are delighted that the (Union) government is doing what it is supposed to do—protect the common property resource of groundwater from rampant exploitation, particularly in water-stressed areas," Amit Srivastava of the Center toldBusiness Standard. " This should serve as a notice to other companies that they cannot run roughshod over Indian rules and regulations and deny community rights over groundwater." 

Although plans for the expanded plant will not go forward in Mehdiganj, Coca-Cola is seeking another location for expansion and plans on keeping the original plant there going. In the meantime, the plant will be limited to production of 600 bottles per minute at the old factory, per the regulations of the National Green Tribunal, which works to make sure groundwater is used safely and without increasing pollution. 

This post originally appeared on The Wire, an Atlantic partner site.

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