This article is the first part of a series of four articles by Paramjeet Singh. Find the second part here.
By Paramjeet Singh
The dispute involves the Indian government inspecting the regulatory mechanism and intervening in what is supposedly characterised as ‘free market’. This is in order to fix the alleged high prices at which the innovative Bt technology is being offered by the multinational Monsanto to the domestic seed companies. The resultant shifting of the burden onto the farmers has also added to the issue.
The Background of the Conflict
In 1988, the World Bank gave loan worth $150 million in order to open the Indian seed market to privatisation and international seed companies. This was done to make the Indian seed scenario more market responsive. Thus, the government launched New Seed Industry Development Policy.
Many studies have suggested that the privatisation process and the opening up of the market were good for the competitiveness of the Indian seed industry. However, there are some who claim that the opening up of the seed sector caused more harm to the farmers, environment, and food security.
The issue of Monsanto’s Bt cotton has a long history in India. It began in 1998. Monsanto’s website claim that they invest more than $2.6 million per day in R&D. The reason Monsanto advances for the protection of its patents is the incentive for private companies to pursue and re-invest in innovation. This is an incentive function of IPRs.
Another argument advanced by Monsanto has origins in the investment function of IPRs. According to the company, the patent system is crucial to ensure that the products and the investment put in for the development of products are paid for.
Prof. Joseph Stiglitz, noted economist and Nobel Laureate, rightly observes that the market is monopoly driven. Monsanto allegedly has been abusing its dominant position in the market and reaping monopoly profits.
Generally, the Indian seed companies enter into a sub-licensing agreement with Mahyco Monsanto Biotech (India) Limited (MMBL) with regard to Bt cotton technology. This is in lieu of an upfront one-time non–refundable fee of INR 5 million and recurring fee referred to as ‘Trait Value’. There are 49 Indian seed companies who are the licensee of this technology from MMBL and interesting only the biggest 8 Indian seed companies are leading the fight against Monsanto.
The Governmental Action
By a notification dated March 8, 2016, the Department of Agriculture, Cooperation, and Farmers, declared the Bt cotton’s maximum sale price including certain components. These components were the Seed value and Trait value including taxes for the financial year 2016-17.
The Government made this decision under the powers conferred on it by Section 3 of the Essential Commodities Act, 1955 in order to ‘provide an effective system for fixation of a maximum sale price of cotton seeds to ensure their availability to the cotton farmers at uniform as well as fair, reasonable and affordable prices’.
The government introduced the Order and the notification after Indian seed companies complained that Monsanto allegedly charged very high GM Technology (GM Trait) Licensing Fee for its Bt technology.
The biotech body, Association of Biotechnology Led Enterprises (ABLE-AG) having members like Monsanto, Mahyco, Bayer, Syngenta , DuPont Pioneer etc., opposed the notification. They claimed that it inflicted harm on the innovation in the agriculture biotechnology sector. The government then retracted and withdrew the same.
The biotech body also expressed its resentment that the government did not consult, discuss and share information with technology providing companies or any other stakeholders before taking the step. The withdrawn notification was then placed as draft licensing guidelines inviting comments and feedback from the public.
A Futile Exercise
According to Pre-Legislative Consultation Policy 2014, consultations should be held with all stakeholders in addition to placing the proposal in public domain. However, this is a futile exercise for three reasons.
First, the requirement is not mandatory, in the sense that the government can evade it without assigning reasons. Second, it seems to be merely a formality. The government does not assign any reason for the acceptance or rejection of any suggestion or comments.Third, it excludes the direct participation of the affected people. The affected lack the literacy and awareness to understand the proposed legislation and its effects. Such interest groups are normally represented by certain politicised non-government organisations.
Federation of Seed Industry of India (FSII) requested the government to rescind the draft guidelines and the Order. The founding members of the Federation include Bayer, Dow, DuPont Pioneer, Monsanto, Syngenta etc.
Considering that Monsanto is a major player in the market, the merger with Bayer will further increase its dominance in the market. It is yet to be seen what the Government of India will again come up with.
Paramjeet Singh is a lawyer practising before the Supreme Court of India.
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