Indian authorities threaten to demolish 'illegal' Coca-Cola plant

LUCKNOW, India (AFP) - Authorities in northern India said on Friday that they would demolish an "illegal" Coca-Cola bottling plant at the centre of protests over accusations it is extracting too much groundwater.

The local revenue administration ordered demolition of the Mehdiganj plant last month in Varanasi in the state of Uttar Pradesh, saying it was built on village council land and was "illegal".

The village administration earlier imposed a 126,000 rupee (S$2,600) fine on Hindustan Coca Cola Company Pvt, a unit of Coca-Cola, the world's largest soft-drinks maker.

India is one of Coke's fastest-growing markets thanks to an expanding middle class.

Subordinate revenue administrative officer Manoj Rai told AFP on Friday he plans to "implement the demolition orders in a couple of days. There is no question of not following the order".

But Coca-Cola India spokesman Kalyan Ranjan said the company has "all the documents to prove our land ownership," adding the soft drinks maker had "appealed against this order".

Further comment from Coca-Cola was not immediately available.

The Varanasi bottling plant, one of 58 that Atlanta-based Coca-Cola has in India, has been at the centre of protests for years with demonstrators accusing the company of creating major water shortages through excessive extraction of water and polluting groundwater and soil.

Coke announced last year the completion of work to expand the Varanasi bottling facility, which can produce 600 polyethylene terephthalate (PET) bottles a minute.

Similar public protests have been held against Coke's bottling plants in other parts of the country, alleging depletion of ground water and pollution.

The company has consistently denied the allegations.

The tussle between industry and locals in Varanasi reflects a wider fight in India, where efforts to modernise have often encountered protests by villagers who make up over half of the country's 1.2-billion population.

Coke exited India in 1977 following a government ruling that would have required it to share its secret formula with Indian partners, but re-entered in 1992.

Last June, Coca-Cola, which sells both carbonated and non-carbonated drinks in India from Coca Cola and Sprite to Minute Maid, announced plans to invest US$5 billion (S$6.38 billion) in India by 2020 to boost manufacturing and distribution networks and enhance marketing.

The company invested around US$2 billion in the country between 1993 and 2011.