Monsanto threatens to exit India over GM royalty row

Fri Mar 4, 2016 7:45am EST
 
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By Mayank Bhardwaj

NEW DELHI (Reuters) - Monsanto Co, the world's biggest seed company, threatened 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 seeds.

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 in lieu of royalties and an upfront payment. MMB also markets the seeds directly, though the local licensees together command 90 percent of the market.

Acting on complaints of local seeds companies that MMB was charging high fees, the farm ministry last year formed a committee to look into the matter.

The committee has now recommended about a 70 percent cut in royalty, or trait fee, that the seed companies pay to MMB, government sources said. The farm ministry is yet to take a decision on the committee's recommendation.

"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.

MMB does not publish revenue figures or say how much it contributes to Monsanto's overall revenue.   Continued...

 
A farmer harvests cotton in his field at Rangpurda village in the western state of Gujarat, India, October 20, 2015. REUTERS/Amit Dave