Coca-Cola’s operations in India seem to be directed from a purely commercial motive. This is no where else more obvious than in Kala Dera – located in the semi-arid desert state of Rajasthan – where the company made the audacious move of setting up a bottling plant. Kala Dera is notorious for its scarce rainfall. Of the last thirty years, ten were officially classified as drought years. On top of this notorious distinction, its groundwater resources were certified by a reliable government agency to be an overexploited. Yet, in the year 2000, Coca-Cola set up yet another of its manufacturing units there. Statistics released by the Indian government for the subsequent years reveal that the water tables in Kala Dera have shrunk more than 9 meters as a result of Coca-Cola’s operations. Moreover, the plant’s intake of water happens during peak summer period, making it impossible for villagers to access drinking water. (Hammond & Prahalad, 2004)
Towards the end of 2006, the International Campaign Against Coca-Cola made a systematic evaluation of the companies performance in India. As expected, the results exposed Coca-Cola’s unethical practices since 1998. The report went on to make concrete recommendations for setting right the record. These include:
1. Extract water only from aquifers which are not in the drought-prone zone.
2. Keep enough water in storage for use in summer.
3. Relocate the manufacturing unit to an area with surplus water.
4. Finally, close down the facility in Kala Dera. (Srivastava, 2007)
Coca-Cola’s response to criticisms:
In response to the last of the aforementioned recommendations, the company’s top management said nonchalantly, “Walking away is the easiest thing we can do. That’s not going to help that community build sustainability. Instead, the Coca-Cola has decided to support drip water irrigation in the area working with fifteen farmers” (Krishnan, 2007). In Kala Dera, there are more than 10,000 people who are involved in farming. This program to supply water to 15 farmers is no more than a publicity stunt. (Krishnan, 2007) In Plachimada, after intense pressure, Coca-Cola did offer drinkable water to the villagers free of cost. But considering the environmental damage that the plant had induced, this attempt at reconciliation with the villagers is no more than a token measure. In its initial reaction to adverse public reaction in Plachimada, the public relations officers of the company denied outright that the accusations against it are false and that it was the handy work of a bunch of radical activists. At the time of this controversy, Coca-Cola’s official website carried the message that the “local communities have welcomed our business as a good corporate neighbour” (Thomas, 2004). But the ground realities belie this assessment.
In spite of protests from every corner of the country, Coca-Cola, it seemed, was bent on using its political clout to get its own way. For example, when Coca-Cola resumed its operations in India in the late 1990s, it promised to divest 49 percent equity stake in the country within a five year period. But, as a result of Coca-Cola’s influence in Washington D.C., political pressure was applied on the Indian government to dilute the terms of agreement (Klein, 2004). This has disempowered Indian investors, who, even if they hold half the entire equity stake have no voting rights and cannot have a say in the company’s policies. The evidence for Coca Cola’s misuse of political contacts comes from the following statement from Robert Blackwill, the then United States ambassador to India, in his letter to the Prime Minister of India: “I would like to bring to your attention, and seek your help in resolving, a potentially serious investment problem of some significance to both our countries. The case involves Coca-Cola, one of the largest single foreign investors in India.” (Vanhamme & Grobben, 2008)