Monsanto Co, the world’s largest GMOs seed company, threaten to pull out of India on Friday if the government imposed a big cut in royalties that local firms pay for its genetically modified cotton Bt seeds.
The US giant is worried as the agriculture ministry likes to enforce a sharp cut in the technology fee to reduce the price of cotton seeds. Cotton Seed Price Control Order by the agriculture ministry has recommended a 70% cut in trait fee.
"We sincerely hope that the government will be fair in its approach and that certain reports in the public domain are false. If the committee recommends imposing a sharp, mandatory cut in the trait fees paid on Btcotton seeds, MMB will have no choice but to reevaluate every aspect of our position in India," said Shilpa Divekar Nirula, CEO of Monsanto India Region
Mahyco Monsanto Biotech (India)(MMB), a joint venture with India’s Mahyco, licenses a gene that produces its own pesticide to a number of local seed companies.
MMB also markets the seeds directly, though the local licensees together command 90% of the market.
The farm ministry last year formed a committee to look into the matter.
“If the committee recommends imposing a sharp, mandatory cut in the trait fees paid on Bt-cotton seeds, MMB will have no choice but to re-evaluate every aspect of our position in India,” Shilpa Divekar Nirula, Monsanto’s chief executive for the India region, said in a statement.
“It is difficult for MMB to justify bringing new technologies into India in an environment where such arbitrary and innovation-stifling government interventions make it impossible to recoup research and development investments,” she said.
Shares of Monsanto India dropped as much as 7 pct to a near 2-year low before ending down 2.4 pct.
In a partnership with Mahyco, US-based Monsanto launched a GM cotton variety in India in 2002 despite opposition from critics who questioned its safety, helping transform the country into the world’s top producer and second-largest exporter of the fibre.
In a ruling last month, the Competition Commission of India, the antitrust regulator, said "there were indications that MMB had abused its dominant position in the country and asked its director general to complete an investigation within two months."
Monsanto said the use of Bollgard technology has increased cotton yields to 552 kg per hectare in 2013-14 from 302 kg in 2002-03, transforming India from being a cotton importer to becoming the world's top producer.