Court verdict on Bt cotton a blow to Monsanto, but not the end of the road
If Bayer, which is acquiring Monsanto, works out a solution with the government, it’s possible that the next generation of Bt cotton technology may still see the light of day in India
In a new twist to the debate on Bt cotton seeds and genetically modified technology, the Delhi high court has ruled that plant varieties and seeds cannot be patented under Indian law. As a consequence the patent held by Monsanto’s Indian arm over its Bollgard-II Bt cotton seed technology is decreed unenforceable in the country, reports Mint.
Monsanto’s Indian arm is now allowed to collect Rs39 per packet as a trait value. Further, the company is allowed to approach a government agency to determine a benefit-sharing mechanism, which means there could still be some royalty payable.
To be sure, the matter will likely be appealed in the Supreme Court. But if the apex court upholds the verdict, then Indian companies may seek a reduction in royalties. Abhijit R. Akella, vice president at IIFL Institutional Equities, says this can benefit Indian firms (to the extent of past royalties), even if the government asks them to pass on the benefits to the farmers.
If passed on to the farmers, the prices of Bt cotton seeds will come down by a similar amount—from Rs740 to Rs700 per packet.
The question is: Is this what the farming community needs?
The larger issue that needs to be debated is the impact the verdict will have on the biotech seeds industry and intellectual property rights in India. Innovators may hesitate to bring new technologies to the country, which can come as a setback to the farming community and the push to yield improvement.
Nevertheless, if upheld by the Supreme Court, the verdict can end monopolies (in terms of companies owning crops such as Bt cotton), says G.V. Ramanjaneyulu, executive director at Centre for Sustainable Agriculture. It can reorganize the seeds industry with limited restrictions in access to technology and pave way for specific patents which can aid farmers in the long run, he adds.
That said, it may not be the end of the road for Monsanto. The firm is being acquired by Bayer AG. “Bayer is generally seen as a company with a more collaborative approach towards governments. If Bayer sits down at the negotiating table with the Indian government and works out a solution, then it’s possible that the next generation of Bt cotton technology may still see the light of day in India at some point in the future, although it may take years,” adds IIFL institutional Equities’ Akella.
Editor's Picks »
- BofA-ML survey: Short EM equity second most crowded trade
- GST-led shift from informal to formal sector happening, but at a snail’s pace
- Uncertain earnings for agricultural input firms despite bountiful rains
- PVR pays a premium for south
- Tata Steel’s Q1 supports India push but investors enquire at what cost