New Delhi, May 24
The government has temporarily suspended an order that put stringent clauses on genetically-modified (GM) technology companies, officials said on Tuesday, bowing to industry concerns over a potential return to licence raj and heavy state control.
The May 18 order, issued by the farm ministry, brought in a raft of changes in how farm biotech companies, such as US giant Monsanto, can do business in India, sign their contracts and price their products.
GM crops are a sensitive issue in India with several organisations including those affiliated to the Rashtriya Swayamsevak Sangh (RSS), the ruling BJP’s ideological parent, opposing them on grounds of bio-safety and market control by seed firms.
In GM crops, genes are altered for a specific outcome, such as pest-resistance. Till now, BT cotton is the only transgenic crop India has allowed. “The government has temporarily put the order on hold. We have not withdrawn it but we will now invite suggestions on the order from the public,” a farm ministry official said, requesting not to be quoted because he is not authorised to speak. Another source said one reason behind the decision is that “the new order could be in violation of India’s legal commitments on intellectual property rights”.
The May 18 order said a GM technology provider — usually MNCs such as Monsanto –cannot charge royalties beyond 10% of the retail price of GM cotton seeds for the first five years.
The price of a packet of the top-selling GM cotton seed is Rs 800. Beyond the five-year period, the royalties go down 10% every year, the order said.
Apart from pricing controls, the Modi government had also tightened regulations around the business model of GM companies.
GM technology providers could not reject any seed producing firm from using their technology, such as BT cotton, if they pay the required fees. If a GM company were to delay a licence beyond a month, then the technology will be “deemed to have been obtained”. Last year, the farm ministry cracked the whip on Monsanto, bringing out orders to cap prices of GM cotton seeds and referring the US farm to the anti-trust Competition Commission of India for a probe into alleged monopoly. The new changes, which the GM industry association called a “huge blow”, are even more far-reaching. They go beyond just controlling the price but also spelt out the terms of business contracts that form the backbone of the GM supply chain.
In the GM seed business, Monsanto offers its technology by licensing it to seed-producing firms, who then mass-produce seeds to sell in the markets. In that sense, Monsanto relies on royalties as a principal source of revenue. India is the world’s second-largest exporter of cotton and nearly 90% of the white fibre it grows is of the GM variety. Maharashtra, Andhra Pradesh and Gujarat are the three top growers, but a widespread rural distress due to a back-to-back drought has cut output and farm incomes, leading to suicides by farmer.
New Delhi, May 24