Coca Cola threatens Quit India?

Thanks to Mr.Arvind Subramanian, the Chief Economic Advisor, we at least know that there is something like a “Sin Tax”. This is a tax paid for sinning – tobacco and aerated drinks fall into this “sinning” category.  And Coca Cola is fuming mad! It has threatened to leave India is this tax, as proposed is levied.

This is a part of the GST Bill and will attract the same 40% tax which affects tobacco companies. But we did not hear a single tobacco company say that it will quit India. Why does Coca Cola want to quit? It says, “any step in this direction will lead to several challenges for our business and do a lot of damage to us. Our 3 million retailers, thousands of distributors and bottlers... Because this is GST, it will have a ripple effect and hurt the entire ecosystem. In these circumstances, we will have no option but to consider shutting down certain factories.”

And this same tax is know either as Sugar Taxes or Soda Taxes. India is not the only country proposing it, given the ill-effects of consuming these very high sugar drinks. Mexico has already imposed a  Soda tax and it saw a 6% dip in sales in 2014. But Coca Cola did not exit Mexico. Even in Britain Parliament, there is talk about Sugar Tax.  France already has a tax on all beverages with added sugar or with artificial sweeteners had already been introduced in 2012. Finland had a sugar tax since 2011 and it recently it scrapped it in Sept 2015. Norway and Denmark too have imposed similar taxes.

So why these threats to India? Sales are dropping in USA and these companies can simply not afford to quit India at this juncture. By the way, States of California and New York adopted such taxes in 2014; could Coca Cola quit its own home?

Maybe another opportunity here for Patanjali?