Monsanto threatens pull-out over proposed royalty fee cut on GM seeds

US agro-chemical giant Monsanto Co on Friday threatened to pull out of India and hold back new genetically modified cotton technologies if the government continues its ''arbitrary and potentially destructive'' interventions that seek to cut the company's royalty fees.

Mahyco Monsanto Biotech (India), Monsanto's joint venture with Maharashtra-based 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 per cent of the market.

The agriculture ministry last year formed a committee to look into complaints by local seeds companies that MMB was charging high fees. The committee's findings also validated their complaints.

The committee has since recommended a 70 per cent cut in royalty, or trait fee, that the seed companies pay to MMB. The agriculture ministry is yet to take a decision on the committee's recommendation.

MMB argues that the government has no role in determining trade fee between Monsanto and local companies and that a move to control private contracts will result in Monsanto pulling out new technologies in India.

The company says government regulations threaten the profitability of investments made in research activities.

"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.

The government panel, however, was clear in its view that the crop cost for cotton farmers has gone up after MMB substantially raised fees for sub-licensing BT cotton seed technology since 2002.