Soft drinks giant Coca-Cola will raise its investment in India by an additional $3 billion in the next eight years up to 2020, betting on the country’s growth potential and demographics, its chief executive officer Muhtar Kent said. This is in addition to the $2-billion investment already announced and, with Tuesday’s announcement, the company plans to invest $5 billion between 2012 and 2020.
“We see the potential as big. We see a very great, bright future for India and for Indian business and I think we believe many others will follow like us and see that there is potential here,” Kent, who has lived in India, said. The investment announcement by Coca-Cola comes close on the heels of Swedish furniture maker IKEA’s plans to invest nearly 1.5 billion euros to enter the country’s single-brand retail sector.
These announcements come as a breather for the government, which has been battling criticism over its handling of the economy. Critics say the lack of economic reforms and the taxation policies have scared foreign investors to the sidelines.
Two international ratings agencies Standard & Poor’s and Fitch have revised India’s rating outlook to negative from stable citing lack of reforms, weak public finances and slowing growth.
The firm has already invested more than $2 billion in India since it re-entered the country in 1993. Tuesday’s announcement takes the total investment to $7 billion since the company’s return to India. The company and its bottling partners have drawn up plans to tap into the opportunities in India and has lined up investments in innovations, expansion of distribution network, cold drink placement and augmentation of manufacturing capacity.