Amid tensions fuelling between India and the US over Donald Trump’s decision to impose tariffs on steel and aluminium imports, the latest decision by the Indian government to cut royalties that Monsanto Co charges from the domestic seed companies may trigger another row. It is the second cut in royalty that the government has implemented in the last two years. The government will reduce the royalties paid by the local seed companies to the US-based company’s genetically modified (GM) cotton seed for its genetically modified (GM) cotton by 20.4 percent, Reuters reported citing a government order.
India has progressed from being a net importer of cotton to become the world’s largest exporter in 2015 since the introduction of Bollgard technology in 2002 and Monsanto’s Bollgard technology has helped in achieving the same, Mahyco Monsanto Biotech (India) told FE Online.
“The technology was introduced in India and broadly licensed by the technology provider to seed companies through mutually agreed-upon private contracts. However, the Cotton Seed Price Control Order (CSPCO) was issued in 2015 against the backdrop of a bilateral dispute, in which a few licensee seed companies withheld from MMB contractually agreed-upon fees. These fees were less than 1.5% of the cost of cultivation for farmers. It is unfortunate that today’s Order further erodes trait fees, which are now less than 0.5% of the cost of cultivation, while the technology continues to provide value to farmers across India. The path to India’s future success as a globally competitive agricultural producer can be found in the cotton success story of the past 17 years. However, a proven combination of collaboration and a predictable business environment will be essential to attracting future investment into agricultural innovation. This approach will also be crucial to the government’s admirable vision of doubling farmers’ income and generating inclusive and sustainable economic growth,” told Mahyco Monsanto Biotech (India) Pvt. Ltd. spokesperson to FE Online over an e-mail.
Back in 2016, Monsanto had threatened to leave India after the government slashed royalties by over 70 percent. Over 90 percent of of cotton crop produced in India currently is genetically modified. The government didn’t change the royalties and retail prices of GM cotton seeds last year.The agriculture ministry has also cut the GM cotton seeds prices by 7.5 percent to 740 rupees ($11.39) for a packet of 450 grams in order to provide help to the farmers who are struggling with pest infestations, Reuters reported citing the same government order.