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US warns India of investment fallout

The US Govt and business leaders are warning of potential fallout on investment in the booming country of a billion-plus people.

india Updated: Aug 22, 2006 15:23 IST

As Coca-Cola and Pepsico lose their fizz in India, the US government and business leaders are warning of potential fallout on investment in the booming country of a billion-plus people.

The soft-drinks giants are suffering a publicity nightmare in India after an environmental group alleged that their sodas contain toxic levels of pesticides, leading to full or partial bans in six Indian states.

The clamour against Coke and Pepsi has been an unwelcome reminder to some in the United States that India, despite more than a decade of economic reforms, remains a hazardous place to do business.

"This kind of action is a setback for the Indian economy," Undersecretary for International Trade Franklin Lavin said.

"In a time when India is working hard to attract and retain foreign investment, it would be unfortunate if the discussion were dominated by those who did not want to treat foreign companies fairly," he said.

The soft-drinks giants have hit back with a barrage of press statements and publicity campaigns in India to insist that their beverages are perfectly safe.

"So I'm hoping that (US) companies don't use this as a measure to decide whether to invest in India," said Kiran Pasricha, the US head of the Confederation of Indian Industry (CII).

"I see it as local politics in the Indian context. Investors have to see the bigger picture."