ICRA expects that price controls and compulsory licensing guidelines, as enacted in case of Bt Cottonseed are likely to have an adverse impact on the long-term growth of the Genetically Modified (GM) seeds industry. While the Cottonseed Price (Control) Order, 2015, aims to notify the maximum selling price for Bt Cottonseed along with the trait-value, the Licensing and Formats for GM Technology Agreement Guidelines, 2016, if implemented, require the technology providers to compulsorily give license to all applicants. These steps are likely to have an adverse impact on the technology providers. This, at a time when the roll-out of more GM crops has been slow, would hamper the adoption of GM crops in the country. Says Mr. Harsh Jagnani, AVP, Corporate Sector ratings, “While the current situation of financial stress on cotton farmers may justify some intervention on part of the government, a more conducive regulatory environment is critical for the long-term growth of the GM seeds.”
India embraced its first GM crop in 2002 with the commercialisation of Bt Cottonseed developed by Mahyco Monsanto Biotech (India) Private Limited. Bt Cotton now covers 95% of total area devoted to cotton. However, no other GM crop has been approved since then, notwithstanding the roll-out of field trials to assess the bio-safety of GM crops in 2009. At such time, controlling the GM seeds licensing of technology providers may further restrict research and development of GM crops in India. India with its fairly low seed replacement ratio and a higher proportion of extant varieties in its commercial seed portfolio can ill-afford to lower the research spends.
ICRA notes that the way forward lies in promoting research for development of GM seeds for new crops– both by public and private technology providers and according timely approvals for commercialisation of new varieties. ICRA notes that the public sector (comprising Indian Council of Agricultural Research and State Agricultural Universities) breeding programs have been a major source of germplasm and finished in-bred lines to many private breeding programs in the past. Thus, public investments in research efforts assumes greater importance in the era of GM crops, especially in addressing concerns regarding the harmful environmental / health impact, and concentration of pricing power with the private sector. ICRA believes that expanding the pool of GM crops and allowing more technology providers to operate could create healthy competition in the market and lead to fair pricing of license fees such as Trait Fee on the basis of market forces, thereby alleviating the primary concern of the policymakers from GM seeds.
Mr. Jagnani concludes: “The institutional structure governing agricultural research and policy; and biosafety framework plays an important role in advancing the implementation of GM technology. Certain aspects such as state-level approvals for field trials and in-ordinate delays in commercialisation of GM products are potentially limiting factors for the growth of the sector. While there is a need to protect the interests of small and marginal farmers, the regulations should aim at creating an enabling environment to promote healthy competition in the market which would ensure fair pricing of trait fees.”
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