Relief to Monsanto as India delays royalty cap on GM cotton seed

The government has deferred a decision on capping royalties on genetically-modified (GM) cotton seeds for a three-month period, bringing relief to US-based Monsanto Co, its sole supplier in India.

A press note issued by the ministry of agriculture on Monday said the implementation of the order has been deferred pending consultations with stakeholders.

''The notification regarding guideline for Bt cotton technology issued on 18-05-2016 will be put in the public domain for the period of 90 days, in the same form for comments and suggestions of all stakeholders,'' says the press note. .

Reports quoting agriculture ministry sources said the order is being withdrawn to facilitate an informed debate on the subject.

"We are temporarily withdrawing the order," the report quoted an unnamed source as saying.  .

In an order issued last week, the government has nullified all licensing agreements between Monsanto's trait provider in India for gene monitored cotton (GM cotton), Mahyco, and local seed producers and has prescribed norms for licensing, in a bid to end arbitrary pricing of seeds.

The government also prescribed new rules, which follow an earlier government order in March cutting royalties that local seed firms pay to Mahyco Monsanto Biotech (India) (MMB), a Monsanto joint venture with India's Mahyco on Bt cotton seeds, will now also cap royalties for any new variety that the market's sole supplier - US-based Monsanto Co - decides to develop and sell.

Now, for any new or advanced variety of GM seeds, Monsanto cannot charge royalties more that 10 per cent of the price of seeds, fixed at Rs800, for five years from the date of commercialisation, according to the ruling.

From the sixth year, the royalties, or trait value, will taper down by 10 per cent every year, said the order, which laid down these guidelines without naming Monsanto.

Also, as GM traits are expected to have a limited period of efficacy, any variety which loses its effectiveness will not be eligible for royalties, the order said.

The order also specified that any local seed company seeking licences for selling any new Bt cotton variety shall get the license within 30 days of requesting the licensor.

Under the new norms, technology providers as licensors have no right to deny licence to a seed provider if the latter meets the following basic criteria - Possession of a valid government licence as a seed company and access to a laboratory to carry out tests required for breeding and testing GM traits.

Also, the licence needs to be granted within 30 days of receipt of request. If a licence is denied an ''eligible'' firm, it can take recourse to the seeds controller who has powers to issue directions to the trait-providers to ''ensure non-discriminative licensing''.

About 49 seed companies in the country use MMBL's Bollgard-II double-gene technology, which provides in-built protection for cotton against the destructive American bollworm. About 90 per cent of the country's cotton area of 11.8 million hectares (in the 2015-16 season) was under Bt cover. Domestic cotton production has risen manifold since the introduction of Bt seeds - from 13.6 million bales in 2002-03 to a projected 30.5 million bales in 2015-16.

The Association of Biotechnology Led Enterprises-Agriculture Focus Group, a pro-GM advocacy group, says the new order which makes royalty arrangements tougher for innovators, will be a "huge blow" to innovation in agricultural biotechnology, adding that the decision would discourage companies from investing in research.

Monsanto spokesman in India said the company is evaluating the order.

These have all been kept in abeyance for a three-month period for consultations with stakeholders.