George Fernandes: Minister who drove Coca-Cola out of India

In 1977, George Fernandes became Industry Minister in the Morarji Desai government post-Emergency and was responsible for driving multinational drink manufacturer Coca-Cola out of India. 

It is another matter the drink made a re-entry into India later. 

That year, Fernandes decided to throw Coke (as well as IBM) out of India because the soft drinks company was refusing to adhere to a particular provision of what was then the Foreign Exchange Regulation Act (FERA).

This provision stipulated that foreign companies should dilute their equity stake in their Indian associates to 60 per cent if they wanted to continue to operate in the country.

Fernandes announced in Parliament that the Coca‐Cola Company had been asked to transfer 60 per cent of the shares of its Indian company and the formula for its concentrate to Indian shareholders or cease operations in India. 

Coca‐Cola said that it was agreeable to transferring a majority of the shares but not the formula, which it contended was a trade secret.

Officials from George Fernandes's office, however, asserted Coca-Cola's role in the Indian economy was so insignificant that its exit would not make any difference.

It was then that George Fernandes introduced a substitute indigenous drink called 77 and said it was ready to take over the Indian market.

It left India and did not return for nearly two decades. By which time, the economic situation had undergone a major transformation. More importantly, the particular provision in FERA had been diluted completely.

(With inputs from agencies)