The sale and production of US Coca Cola and Pepsi Cola were banned in southern Kerala State on Wednesday, due to alleged pesticides in the drinks. The country's highest court told the US beverage giants to reveal the ingredients of their products.
Five other states have already announced partial bans on the drinks in schools, colleges and hospitals.
But Kerala is the first to completely ban their production and sale.
Both companies, in a statement issued on Wednesday by the Indian Soft Drink Manufacturers' Association, said their drinks were safe and they held consumer safety paramount.
This is not the first time Coca-Cola and PepsiCo have faced charges in India of excessive pesticides in their soft drinks.
Three years ago, the Center for Science and Environment made similar allegations. At the time, Coke and Pepsi sales declined for a while, but then recovered as the controversy waned.
"For three years we have looked very hard at this and engaged the best scientific minds in the world, and all of the data and all of the science point to the fact our products in India are absolutely safe, just as they are elsewhere in the world," said Dick Detwiler, a New York-based spokesman for PepsiCo's international division.
Despite the huge popularity of the drinks, the companies are often held up as symbols of Western cultural imperialism and the New Delhi-based Center for Science and Environment report has been seized on by nationalist groups, as well as environmental campaigners.
Coca-Cola pulled out of India in 1977 after the government insisted that it reveal the formula. It returned 16 years later.
We will have to wait and see what happens this time.