Coca-cola CEO James Quincey is to be expected to meet Prime Minister Narendra Modi during his India visit next week amid talk that a sugar tax may be brought on carbonated beverages as part of the programme to promote a healthy lifestyle.
An official who is directly related to the development said, “Quincey will discuss the implications of a likely sugar tax with the PM, with the Goods and Service Tax (GST) expected to roll out soon.”
The proposed meeting is not yet confirmed from the administration and that to be take place before the executive assumes leadership of the largest beverage firm of the world.
In response to a query a Coca-Cola India spokesperson said, “We are yet to receive any official confirmation from the office of the Prime Minister with regard to this meeting, (and), therefore, unable to comment.”
Last week Coca Cola India president Venkatesh Kini had suggested a sugar tax on all products that use the sweetener. Coca-Cola, Sprite fizzy and Minute Maid juices makers are pushing for a post-GST taxation policy that would treat all companies fairly based on the content of the product. India is the sixth biggest market of the beverage maker.
The India arm of the US company has looked for that the average tax rate of 34% to be retained on aerated drinks after the GST come in effect. According to a GST Council, a cess of 15% will be levied on this particular category on top of a peak rate of 28%. This will make the total tax rate at 43% on carbonated drinks. Coca-Cola had proposed a 6% cess over peak rate.
Kini had told, “We hope and expect that all products that contain sugar will be taxed according to their content across categories, and that beverages are not singled out. We are hopeful GST will be levied on the basis of sugar content, not on the basis of carbonation.”
Cola-Cola also wants to roll out of the GST to be postponed for a couple of months. Aerated drinks companies are pushing for a differentiated tax structure based on sugar content instead of carbonation.
A top bottling official said, “A higher tax at this juncture, when aerated drinks makers are facing slowing growth, will significantly impact the category’s revival. It will lead to higher consumer prices when the concerned companies are pushing volumes and launching smaller packs. The category is neither a luxury nor a sin product. So the higher taxation is not justified.”
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