In a petition to the ministry last week, the two MNCs, who are bitter market rivals, joined hands to call for a reduction of excise burden on the soft-drinks industry.

"Tax levels on this industry are the highest in the world, preventing growth in volumes," Pepsi spokesperson Deepak Jolly said, while Coke spokesperson Rahul Dhawan said that "if the centre reduces excise levy, we promise to pass down the relief to consumers."

At present, excise duty on soft drinks is calculated on 50 per cent of the maximum retail price, which works out to Rs 2 for a soft drink priced at Rs 8.

Both Coke and Pepsi maintain that the high excise duty is one such factor which is impeding growth of the soft-drinks industry in the country. The excise burden, which is paid by Coke and Pepsi bottlers, is ultimately borne by consumers. As an alternative to excise-rate reduction,the two MNCs have asked the centre to revert to the method of excise calculation followed till late 1997. Earlier, excise was calculated on the basis of manufacturing cost or ex-factory price instead of the MRP. Industry sources, however, pointed out that the centre is unlikely to concede to this as the earlier method led to lengthy calculations. Moreover, excise worked out on this formula was found to vary drastically on a regional basis. The soft-drinks industry has also suggested that the manufacturing cost be calculated on a uniform estimate of manufacturing cost prepared by the Bureau of Industrial Costs & Prices.

After two years of recessionary trends, the industry is expecting a 20-25 per cent growth this year. The discouraging market growth last year was attributed to the high excise structure.

Soft-drink sales peaked this summer, supported by strong distribution networks. According to industry sources, the cost of a cola bottle is a major factor in determining demand. A major part of soft-drinksconsumption is based on impulse purchase which depends on price. A lowering of price, helped by a decrease in excise, can help boost demand and market growth, sources said.