Govt cuts Bt cotton royalty fees by 74%

Price of Bollgard II Bt Cotton seeds reduced to Rs800 per 450 gm packet; royalty fee down to Rs43 per packet from Rs163

Sayantan Bera, Shreeja Sen
Updated10 Mar 2016, 02:51 AM IST
Centre has slashed royalty fees on Bt Cotton despite Monsanto&#8217;s threat to re-evaluate its India business if such a move was considered. Photo: Bloomberg<br />
Centre has slashed royalty fees on Bt Cotton despite Monsanto&#8217;s threat to re-evaluate its India business if such a move was considered. Photo: Bloomberg

New Delhi: India on Wednesday cut prices of genetically modified cotton seeds and slashed royalty fees by 74%, disregarding global seed major Monsanto Co.’s threat to re-evaluate its India business if such a move is considered.

The maximum sale price of genetically modified Bollgard II cotton seeds was reduced to 800 (per 450gm packet) from 830-1,000 earlier, according to a notification made public on Wednesday evening.

The sharpest cut is on royalty or trait fees. They were reduced by 74%, from 163 per packet to 43 (excluding taxes). The latest prices will come into effect from the next kharif crop season, sowing for which begins in June.

Last week, Mint reported that a nine-member committee constituted by the central government on cotton seed prices recommended reduction in royalty fees payable to seed technology companies, such as Monsanto, and an overall lowering of seed prices.

While the move will benefit nearly 8 million cotton farmers in India, it raises concerns about the country’s intellectual property rights regime.

The cotton-seed, price-control committee, formed by the government on 27 January, submitted its recommendations to the government last week.

After reports on the panel’s recommendations emerged, Monsanto India Ltd, in a statement last week, said that it will “re-evaluate every aspect” of its position in India and re-think bringing new technologies in a regulatory environment that is “arbitrary and innovation stifling”.

On Wednesday’s price fixation order, a spokesperson for Monsanto said, “We are in the process of examining the notification in detail and will be able to comment only after we study the document in its entirety.”

The move reflected poorly on the country’s intellectual property rights regime, according to expert Shamnad Basheer.

“This sends a bad signal internationally that we’re fairly arbitrary. We have the power to regulate patents, no doubt, but it should be open, transparent and based on robust methodology for a concrete, legitimate purpose,” said Basheer, founder of intellectual property rights blog SpicyIP and former intellectual property rights chair at the West Bengal National University for Juridical Sciences, Kolkata.

The order does not offer a methodology on how the government arrived at the trait fees. Prima facie, it appears to be an arbitrary exercise of state power with clear aim of unduly benefiting one stakeholder, that is, the (domestic) seed companies, Basheer added.

In India, Monsanto Mahyco Biotech (India) Ltd (MMBL), a joint venture of Mahyco Seeds Ltd and Monsanto, licenses its patented Bollgard II cotton seed technology to 49 seed companies in exchange for a royalty fee.

More than 90% of the cotton grown in India uses this technology.

Seed industry lobby National Seed Association of India (NSAI), which pressured the government for a reduction in royalty fees, welcomed the decision.

The technology is facing redundancy, and we are pleased that the domestic industry and farmers’ concerns were heard, said Kalyan Goswami, executive director of NSAI, said.

The other industry lobby of research and development (R&D) firms, Association of Biotechnology Led Enterprises Agriculture Group, slammed the centre’s move.

“We strongly oppose the it violates the principle of free market economics. By slashing trait fees, the government has clearly shown that it is going for short-term populist measures rather than supporting innovation in the long term,” said Shivendra Bajaj, executive director of the group. “The decision will be detrimental in the long run as companies may have to reconsider their investments in seed-based R&D in the country due to the current uncertain environment.”

The agriculture ministry on 7 December issued a price control order to bring uniformity in genetically modified Bt Cotton seed prices across states.

The ministry also said royalty fees should be lowered because Bt Cotton’s ability to resist pink bollworm pest attacks had weakened.

MMBL has petitioned the Delhi high court to quash certain provisions in the price control order, specifically those allowing the centre to determine royalty fees. The court heard the case on Wednesday and the next hearing is on 23 March.

A drastic reduction in trait fees means substantial losses for MMBL. The firm, in an emailed response last week, said it does not comment on the specifics of its financials. But according to NSAI’s calculations, MMBL collected 4,479 crore in royalty between 2005-06 and 2014-15.

India approved the genetically modified Bt Cotton technology for commercial cultivation in 2002. The selling point of the technology was its resistance to the bollworm pest that reduced use of pesticides. While the technology helped India become the world’s second largest producer and exporter from a net importer of cotton, in recent years, resistance of Bt Cotton to pest attacks has become a recurring issue.

Apurva Vishwanath contributed to this story.

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First Published:10 Mar 2016, 02:51 AM IST
HomeindustryGovt cuts Bt cotton royalty fees by 74%

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