Coca-Cola India warns of factory closures if "sin tax" applied
Coca-Cola said it had opened three Greenfield sites in India recently
The Coca-Cola Co has said it would have "no option" but to close factories in India if a proposed "sin tax" on CSDs is introduced.
Indian authorities are attempting to simplify the country's tax code with a national goods and services tax. However, plans include a 40% tax rate for aerated beverages in an attempt to tackle health issues arising from obesity.
Saying the 40% tax would make the industry "unviable", Coca-Cola's India unit warned that the move would send shockwaves through the entire beverage sector and lead to a fall in consumer demand. It also said there would be a "significant rationalisation of manufacturing capacity".
"In these circumstances, we will have no option but to consider shutting down certain factories," Coca-Cola said.
India is a key market for Coca-Cola, which has seen falling volumes for CSDs in core Western markets. The company has already invested more than US$2.5bn in the country and plans to spend a further $5bn by the end of 2020. In the past 20 months, it has opened three green-field sites in India, it said.
Last year, Coca-Cola launched Coke Zero in India.
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