40 percent sin tax will force factories' shutting down: Coca Cola

Beverages giant Coca Cola India on Friday said it will have no other option but to shut down some of its factories if a sin tax of 40 percent is imposed on aerated drinks within the proposed Goods and Services Tax (GST).

"An acceptance of the Arvind Subramanian committee recommendations with regard to GST rate of 40 percent on aerated beverages, will have a negative ripple effect on the entire beverage ecosystem," said Coca Cola India in a statement.

Chief Economic Adviser (CEA) Subramanian-headed committee on GST recommended a sin tax of 40 percent on aerated drinks, tobacco and luxury cars while the suggested standard GST rate is 17 to 18 percent.

The soft drink behemoth noted lakhs of retailers, thousands of distributors, transporters, cold drink equipment manufacturers, farmers and producers of raw materials for the industry and the whole forward and backward supply chain systems will suffer as it contended the separate sin tax component for certain products is not in line with the single GST rate aspiration of the CEA headed committee.

"This is not in line with the 'Make in India' programme launched by the government of India, which recognizes 'Food Processing' as an important sector within the program and specifically mentions our industry under the line item category of 'Consumer food: packaged food, aerated soft drinks, packaged drinking water' and also 'Beverages: fruit-based and cereal-based'."

Reiterating its commitment to India, it said it plans to invest $5 billion by the end of 2020, having already invested $2.5 billion and running 57 factories supporting 7,000 distributors, 30 lakh retailers and creating direct and indirect employment to more than 200,000 people.