Chennai, April 21: The Tamil Nadu government has cancelled the land allocation for a Rs 500-crore Coca-Cola plant after protests by farmers.

The AIADMK government's annulment of the 71-acre plot at Perundurai in Erode district, around 500km from Chennai, comes at a time of raging protests in Parliament and outside against the Centre's new land acquisition law.

The cancellation follows prolonged protests by Perundurai farmers, who feared the proposed plant would deplete ground water and dump effluents that would render their fields unfit for cultivation.

The land was allotted in June 2013 by the AIADMK government, then headed by Jayalithaa, for the plant that was to bottle beverages and packaged drinking water. Jayalithaa was unseated in September last year after her assets-case conviction. Confidant A. Panneerselvam is chief minister now.

The government has cited non-compliance of the lease terms and conditions by Hindustan Coca-Cola Beverages Pvt Ltd, a Coke arm, as the ground for the cancellation.

The company ran into resistance from farmers when it started soil tests ahead of the construction. The protesters had formed a trust to strengthen their campaign.

"We are happy that the state government has finally bowed to public pressure. We hope it will consult stake-holders before making such decisions in the future," said R. Subburaj, the convener of the protest committee.

Hindustan Coca-Cola Beverages said in a statement that though it was committed to investing in Tamil Nadu, it was "withdrawing from the present project due to local activism and inordinate delays in the government process". The company has sought full refund of the money paid to the government towards lease and other clearances.