The Indian unit of global beverage maker Coca Cola may have to shut down some of its bottling plants if the government implements a proposal that seeks to impose a 40 per cent “sin” tax, the company said in a statement today.
The proposed move is part of the national Goods and Services Tax (GST) that the government is trying to push through Parliament. A government-appointed panel examining the GST has suggested a standard rate of 17 per cent to 18 per cent, and a higher tax of 40 per cent on some goods including the carbonated drinks Coca-Cola sells.
Coca Cola, which operates 57 factories and bottling plants across India, said a proposal to group sugary sodas with higher-taxed luxury cars and tobacco would hurt demand for its drinks. "It will lead to a sharp decline in consumer purchase," Coca-Cola India said in the statement.
"In these circumstances, we will have no option but to consider shutting down certain factories," the statement added.
While more than a fifth of India's population lives below the official poverty line, the country is home to the third-highest population of obese people after the United States and China.
Coca-Cola India, which employs 25,000 staff, said it is on course to invest $5 billion by 2020 as it looks to raise production to target a growing middle class.
Last year, the beverage maker was forced to halt production at one of its bottling plants in the country's north after it was accused of using excessive groundwater.
