Monsanto’s unprecedented decision to withdraw the application for its Bollgard II Roundup Ready Flex technology is a big, and public, challenge to the government’s policy on licensing seeds technology. The move is significant as it comes at a time when the government is in the middle of a consultation on whether to limit royalty rates of seed-tech companies at 10% of the seed price for the first five years, followed by a 10% reduction in each of the following years. Since this order, by way of a gazette notification, came just before prime minister Narendra Modi’s visit to the US, the media attention forced the government to pass it off as a discussion paper. Indeed, last year, the government came out with a seeds price order which not only resulted in the price of the genetically modified (GM) cotton seeds being cut sharply, the cut was far sharper for trait values, or the royalty that firms like Monsanto charge for giving their technology to seed-producing firms. While the Bollgard II seeds price was cut from Rs 930 per bag of seed – with 450 grams of seed and 120 grams of ‘refugia’ seed – to Rs 800, the trait fee was cut from Rs 163 to Rs 42;
so while Monsanto took a hit of Rs 121, the seed companies took a hit of just Rs 9 per bag. And earlier this year, based on the complaints of seed companies who were selling Monsanto’s seeds under license, the ministry of agriculture petitioned the Competition Commission of India and asked it to probe allegations of anti-competitive practices by Monsanto.
Monsanto’s move, part-pressure and part-frustration, is also interesting since, while pests develop a resistance to any technology after a point in time, the only way out is by developing new products – that’s why Bollgard I was followed by Bollgard II, and why a Roundup Ready Flex was being brought in, with a Bollgard III also on the anvil. Since developing new technology is an expensive business, the seeds tech giant does not was artificial restrictions on royalties – even under the seeds price control
order, it has to be kept in mind, royalty rates can still be decided by a government-appointed committee; so, Monsanto is also aiming to get the seeds price control order scrapped.
Not surprisingly, in its response to the government’s discussion paper on royalty rates, Monsanto has said the move amounts to an unprecedented intervention that is both bad in law and policy – while citing Article 300A of the Constitution which says no person shall be deprived of property ‘save by authority of law’, the seed-tech firm has said the proposed compulsory licensing plan for GM technology also runs contrary to India’s IPR policy which allows this only in case of a national emergency, and only if the patented invention is not available at an affordable price. Monsanto also points to India’s need for improved seed, especially those which are heat- and drought-resistant – these are the kind of products GM firms work on and it should be kept in mind that, at $1.7bn a year, Monsanto alone has an R&D budget higher than that of the government of India. Apart from the fact that regulating royalty rates is anti-market and violates so many international agreements that India is party to, given how getting quality seeds is critical for the farmers’ future, the government would do well to back down on the issue. And if, as Reuters has reported, the GEAC has indeed cleared India’s first GM food crop – mustard – quick political clearances will go a long way in restoring India’s credibility in this field.