Global Policy Forum

By Paul Brown

Indian bottling factory may be forced to close after judge orders ban to protect village's supply

Coca-Cola has been ordered to stop drawing ground water for a bottling plant which supplies most of southern India after a court found that it was ruining the environment. In a ruling which threatens to close the 16-hectare (40-acre) Coca-Cola plant in Kerala, southern India, the state's high court has ordered the company to close its boreholes and stop drawing ground water in one month's time.

A thousand local families have been protesting for 608 days, claiming the plant is drawing so much water it is turning their rice paddies into a desert and killing their coconut palms. They brought the action in defiance of the state government, which supported the company. The court said that if it was to continue work at the bottling plant, the company must find alternative sources of water, but this is a tall order in an area which has suffered two dry years and has gone months without rain.

The court ruled that extraction of the ground water at Plachimada village, even up to the limit admitted by the company, was illegal. The company had no right to extract this much natural wealth and the panchayat (local authority) and the government were bound to prevent it. The court found that ground water was a national resource which belonged to the entire society. "Ground water under the land of the company does not belong to it," said Justice K Balakrishnan Nair. "Every landowner can draw a 'reasonable' amount of ground water which is necessary for its domestic and agricultural requirements. But here, 510,000 litres [110,000 gallons] of water is extracted per day, converted to products and transported, thus breaking the natural water cycle."

He also pointed out that the supreme court had stated in earlier orders that underground water belonged to the public and the state should act as a trustee for its protection. Judge Nair said the government also had no power to allow a private party to extract such a huge quantity of ground water, which could result in its drying up. Environmentalists claimed 1.5m litres of water were being extracted every day. Coca-Cola's divisional president, Sunil Gupta, denies these figures, saying the plant extracts only 300,000 litres a day and that it has permission from the government to use up to half a million litres.

Three years ago, the protesters claim, Plachimada produced more than 50 sacks of rice and 1,500 coconuts a year and provided employment for dozens of labourers. Then Coca-Cola built the bottling plant. Local farmers say that the last harvest yielded barely five sacks of rice and about 200 coconuts.

The company issued a statement from its New Delhi headquarters, saying it would appeal against the order, and denying that it depleted the water. One comfort for Hindustan Coca-Cola Beverages Ltd was a direction by the judge to the village council to renew the plant's licence. He also restrained the council from interfering with the functioning of the factory. The village had sought to rescind its licence and force it to close, but the court said it had no power to do so. However, without water it may have to close anyway.

It has been a bad year for the US drinks giant in India, its big expanding market. In August, the director of the Centre for Science and Environment, Sunita Narain, announced that 12 large cold-drink brands manufactured by Coca-Cola and its rival Pepsi, sold in and around Delhi, contained a cocktail of pesticide residues, including chemicals which can cause cancer, damage the nervous and reproductive systems and reduce bone mineral density.

The announcement shocked the country even though the company immediately denied the allegations. To help defuse matters, the company has formed the India Environment Council, to be headed by a former chief justice of India, BN Kirpal. The decision was taken at the first meeting of Coca-Cola's newly-formed India advisory board. The board put environment-related activity as a key focus area for the company. It aims to guide Coca-Cola on various issues including future strategies, corporate citizenship, social responsibility and corporate governance.

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