NEW DELHI, Sept 29, Reuter: When Indian Prime Minister Rajiv Gandhi stopped for a chat with farmers during a recent visit to the Punjab, he heard just one word —Pepsi.

The Indian soft drinks trade is angry over a new joint venture with U.S. foods giant PepsiCo Inc. Farmers, instead, are thrilled by what they see as short cut to internationalizing Indian agriculture.

Pepsi has promised to limit its soft drink concentrate to 25 per cent of total production of the 157 million dollar food processing project for the first decade,

The rest will consist of fruit juices, tomato paste and potato and grain based snack foods.

“For all the soft drinks industry worries, it’s overwhelmingly a food based project,” said Gokul Pandnaik, director of Punjab Agro Industries Corporation (PAIC) a state firm that will hold 36 percent of the joint ventures equity.

National and state farmers unions came out strongly in favor of the project while it was awaiting government approval.

India, strapped for hard currency, appears to have dictated the terms of the deal.

For the first ten years, Pepsi undertakes to generate five times as much from exports as it spends on imports Pandnaik said.

The multinational, which will hold just 39.89 per cent of the equity, will not repatriate any profits until the foreign exchange earnings begin.

For PAIC and fellow Indian partners Voltas Ltd, a subsidiary of the TATA industrial conglomerate, the chief attraction of the deal is access to Pepsi’s marketing network, sprawled across 151 countries, Pandnaik said.

The green revolution of the 1970’s turned the Northern Indian state of Punjab, now torn by Sikh separatist violence into a breadbasket pumping out around one fifth of the country’s food grains.

“The green revolution aimed for self-sufficiency. Now India is confident of that, we have to look outwards to make Indian agriculture internationally active,” said Padnaik.

The Pepsi project will use some 80,000 tons of fruit, a quarter of what the state now produces, and Thirty thousand tons of grain will be processed into snack foods.

A 100,000 dollar agricultural research Centre, which Pepsi will set up with a local University, will work to introduce strains of fruit and vegetables more suitable for processing.

Local horticulture cries out for improvement. A hectare of land, which produces 48 tonnes of tomatoes in the United States, yields only 9.75 tons in India.

Article extracted from this publication >> October 7, 1988