New Delhi, March 4

Monsanto Co, the world’s biggest seed company, threatened to pull out of India today if the government imposed a big cut in royalties that local firms pay for its genetically modified (GM) 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 per cent 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 per cent cut in royalty, or trait fee, that the seed firms pay to MMB, government sources said. Farm ministry is yet to take a decision on the 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 CEO for the India region, said.

“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.”

Shares of Monsanto India fell seven per cent to a near two-year low before ending down 2.4 per cent.