India to Impose 20 Percent cut on the Monsanto Royalties

In 2017-18 India’s cotton output is set to rise by 9.3 percent but still short of the record high predicted by industry analysts because boll worm caused damage in some regions. The Government plans to reduce royalties by 20.4 percent to compensate Indian seed makers and also plans to cut prices of GM cotton seeds to help farmers whose fields have been ravaged by pest attacks, the sources said. The government will finalize its decision soon, the sources said without giving precise timescale. A Monsanto spokesman said he wasn’t aware of any such government order.

Farmers buy GM cotton seeds from Indian seed makers who pay to use Monsanto’s proprietary technology to produce them.

The latest reduction risks another row with the U.S. company, the world’s biggest seed maker, which threatened to leave India in 2016 when the Government cut its royalties by more than 70 percent.

The Government is expected to lower the prices of GM cotton seeds by 7.5 percent to 740 Indian rupee ($11) for a packet of 450 grams, according to the industry and Government sources, who asked not to be identified.

Cotton seed prices have come down drastically in the past few years, but fuel, labor and supply chain costs have risen sharply, squeezing margins of most seed makers, said Kalyan Goswami, director general of the National Seed Association of India producers’ body.

Seed prices need to go up to sustain the GM cotton business in India, Goswami added.

More than 90 percent of India’s cotton crop is genetically modified. Last year the Government kept both the royalties and the retail prices of GM cotton seeds unchanged.

New Delhi approved the first GM cotton seed trait in 2003 and an upgraded variety in 2006, helping to transform the country into the world’s top producer and second-largest exporter of the fiber.


Chander Mohan
Krishi Jagran

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