The Coca-Cola Company has finally bowed to political pressure in India and on Monday suspended production at its south Indian plant at Plachimada. The decision by Coke follows a government order to the company to stop using groundwater until monsoon rains start in June.

In a statement to the Sate Government and its own employees Coke said it was "left with no option but to close down its factory at Plachimada."

The plant has been the centre of a long-running legal argument in India, based on allegations that Coke's use of groundwater in the area had led to nearby farmlands drying up.

Last month, the government of southern Kerala state told Coca-Cola that villages in the area were facing an acute drought and that the soft-drink company should not use groundwater until June 15.

In December a court order instructing Coca-Cola to stop using local groundwater was issued by the High Court in Kerala state.

Coke has denied the allegations it is affecting the local environment and said today that the state had imposed the ban only on Coca-Cola without any scientific proof that it was exploiting groundwater. A Coke spokesman pointed to close to 30 other actories in the area using groundwater, none of which faced similar bans.