Broken commitments: The case of Pepsi in India

By Kavaljit Singh, in PIRG Update,
Issue no. 1, May, 1997

Dear friends,
Public Interest Research Group (PIRG) has launched PIRG UPDATE - an occasional publication dealing with issues related to TNCs,structural adjustment,debt, world bank-IMF policies and development in India. Here is the first issue of the UPDATE.
Kavaljit Singh, Editor
No single foreign investment project has been the centre of much attention and controversy in the late 1980s and early 1990s as the PepsiCo project in India. The project, Pepsi Foods Limited, was cleared by the Indian government in September 1988 as a joint venture of PepsiCo, Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. Before this project was cleared, PepsiCo made an attempt to enter into India as early as in May 1985, when it teamed up with Agro Product Export Ltd., a company owned by R. P. Goenka group, and sought permission from the central government to import cola concentrate and to sell a PepsiCo brand soft drink in the Indian market, in return for the export of juice concentrate from Punjab. Under this proposal, the main objectives put forward by PepsiCo was 'to promote the development and export of Indian made and agro-based products and to foster the introduction and development of PepsiCo products in India'. This proposal which was submitted to the Secretary at Ministry of Industrial Development received rejections on the grounds that the import of concentrate could not be agreed to and the use of foreign brand names as domestic tariff area (DTA) was not allowed.
Nevertheless, taking advantage of the ongoing political problem in Punjab at that time, PepsiCo successfully played the 'Punjab Card' and again put forward a proposal in 1986 with stress more on diversification of Punjab agriculture and employment generation rather than on soft drinks. The proponents of project called it as a second 'Green Revolution' in...