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Supreme Court turns down PepsiCo India’s plea on water rates.

In a setback to industries and soft drinks makers like Pepsi, the Supreme Court has said that those who extensively use water as a raw material for their products are bound to pay higher rates of water . In a ruling which has far-reaching consequences the apex court on September 12 upheld the the governments decision to impost higher water charges used for manufacturing of soft drinks by PepsiCo IndiaHoldings, the Indian subsidiary of the cola giant PepsiCo.

A bench of justices rejected PepsiCo India’s plea that the state governments decision to adopt different rates for different users was discriminatory. The bench dismissed the petition filed by PepsiCo alleging that the MIDC had arbitrarily increased water charges in 2001 for the industrial consumers in the state who use water as a raw material. PepsiCo is receiving the facility of water supply from the Corporation and is obliged to pay at such rates which are demanded by the Corporation as the same rate is being charged by government. The Corporation cannot be asked to suffer a loss of extensive use of water by the Appellant (PepsiCo) using water as raw material for it’s business as it is discharging it’s public and welfare duty for supplying water to help and assist industries like the Appellant the Supreme Court said.

The decision by the apex court comes at a time when water shortages across the country are leading to an increase in stand-offs between industry and other stakeholders over water rights, many Indian state have made it clear to local industry that agriculture and major user of water in the country and the local residential users would gain preference over it in terms of water allocation. Some states have hiked up water charges for industrial users to drive home this point, forcing several companies to make arrangements for captive water supplies which do not draw upon the same water sources that are used by the agricultural and residential users.

PepsiCo India had challenged the decision of the MIDC to increase by 10-fold the water cost imposed on water users in the State from 2001, along with Cola several  other  major companies have also made representations against the issue.