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In a blow to seed technology providers such as Monsanto, the government has capped the trait value (similar to royalty fee) for all new genetically modified (GM) seed technologies at 10 per cent of the maximum sale price.
The fee will be capped for the first five years, from the time when the technology is commercialised in India, after which it will be lowered by 10 per cent every year.
The government already regulates the retail sale price of BT cotton seeds. Cotton is the only crop in which GM technology is allowed for commercial use in India.
Apart from this, the latest government notification has also prescribed a new format for sub-licensing agreements that all seed technology providers would have sign with the seed companies. If such an agreement is not signed within next 30 days, all old agreements would be considered invalid, the notification said.
Monsanto's Indian subsidiary, Mahyco Monsanto Biotech Ltd (MMBL), has sub-licenced GM cotton seed technology since 2002 to 50-odd domestic seed companies. First it sub-licenced BG 1 technology, which went off-patent in 2006, thereafter, has been sub-licensing BG 2 technology.
The GM seeds produced through this technology occupy over 95 per cent of the Indian cotton market. New technology, BG-3, is in the pipeline but its commercial use has not been approved in India so far.
Seed companies allege that MMBL collected around Rs 530 crore annually as trait value from Indian seed companies for its technologies. According to estimates, since 2002, MMBL has collected over Rs 7,000 crore as trait value from seed companies alone. The annual Indian GM seed market is worth Rs 3,500 crore.
The maximum selling price of BG-2 technology seeds is already being regulated by the government through the Cotton Seeds Price Control Order, 2015.
For the 2016-17 cotton season, maximum retail sale price for a 450-gm GM cotton seed packet has been fixed at Rs 800, lower than the prevailing price range of Rs 830-1,030.
This effectively means that seed licence providers won't be able to charge any trait value, irrespective of the cost at which the seed has been produced for a new technology, which they want to introduce in the market.
The agriculture ministry has also capped the upfront fee for the new GM trait at Rs 25 lakh. This is to be paid in two equal annual instalments.
In the new licensing norms, technology providers will have to give licence to all companies seeking GM technology if they fulfil the 'minimum requirement criteria'. The seed companies can also develop their own seeds through research and development, without taking a no-objection certificate from the licence providers.
"For the first time, the technology providers would be authorised to get some kind of a minimum royalty/trait fee. We have kept the royalty at not more than 10 per cent in India, while the global average is seven per cent. If it is below 10 per cent, they can negotiate directly," Press Trust of India reported, quoting an agriculture ministry official.
Meanwhile, Shivendra Bajaj, executive director, Association of Biotechnology-Led Enterprises - Agriculture Focus Group said the Centre's gazette notification is a huge blow to the innovators in agri-biotech sector. "It clearly indicates the intention of the government to disregard research and innovation and thereby not protecting IPR (intellectual property rights) in the sector. This order creates an environment of policy unpredictability and arbitrariness of decision making, which is contrary to the recently-launched IPR policy. Such a decision is a discouragement of research and is contrary to our Prime Minister's vision of bringing research into the hands of farmers," Bajaj said.
Kalyan Goswami, executive director of National Seed Association of India said, "The new notification seeks to address the issue of failure of non-performance of technology. Now, one-sided licensing terms of technology provider will no longer hold ground."
This will do away with the "monopolistic practice and create a level-playing field for all," he added. The new guidelines also prescribe that the technology provider would not be eligible for any royalty whatsoever if a GM trait loses its efficacy as reported by states and verified by the Indian Council of Agricultural Research.
