If India is to reverse the rapid decline in its cotton exports, from $3.6 billion in FY14 to $1.6 billion in FY17, it is clear it needs another big break in terms of productivity, the kind it first got when Monsanto technology first came into the country. Whether that will happen, however, remains unclear since Monsanto has already said it has no plans to now to bring in its Bollgard III technology. The move follows a series of measures to arm-twist it. In December 2015, for reasons that are not clear since farmers were benefitting from Monsanto’s technology, the government came out with a cotton seed pricing order to lower the prices of seed sold by it, from around Rs 930 per bag to Rs 800. And while doing so, the order ensured the bulk of the reduction was borne by Monsanto since, as part of this order, the royalty or trait fee embedded in the seed price was reduced from Rs 170 or so per bag to Rs 49. Till when this happened, Monsanto was selling its seed technology to several firms, all of whom were paying their licence fee except for one.
From then on, matters went from bad to worse. In May 2016, the government introduced a new cap on royalty of 10%. It is not clear why this rule was brought in since the government could control the price of the seed anyway. Since it so happened that prime minister Narendra Modi was going to be visiting the US around then, and the government didn’t want to be seen as hitting a US tech firm, the order was withdrawn and passed off as a mere discussion note. While there was no follow up to the discussion note, there was more trouble ahead for the US seed tech giant.
The dispute between Monsanto and one of its licensees came up before the Delhi High Court in the middle of last year. Since the dispute was a purely commercial one, the government had no role, but for some reason it decided to intervene and additional solicitor general Tushar Mehta told the court that under the Indian law GM plants/seeds could not be patented anyway and that Monsanto’s patent was nothing but an attempt to extract monopoly rents. Since the government had granted Monsanto a patent, it was not clear why the argument was being made but since the statement came in after Monsanto and its estranged licensee had made their arguments, the court refused to accept the government’s voluminous documents and, instead, told it to file a five-page note and said Monsanto would be allowed to object to the arguments made by the government. With the government not going back to court, though, the matter died a natural death.
And now, a section of seed firms are asking for the trait fee on Monsanto’s Bollgard II to be reduced to zero since it was not effective against the pink bollworm—Monsanto, for the record, has said that its technology was meant to control against the American bollworm and it has been quite effective on that front . Whether the government will choose to reduce the royalty to zero is not clear, but it needs to keep in mind that farmers need good seed technology to get more productivity and to deal with the effects of extreme climate change—instead of driving out Monsanto, it needs to find ways to bring it back in.