The Government of India recently reduced the royalty fees to be paid to Mahyco Monsanto Biotechnology Limited (MMBL) by 74 % on Bt cotton seeds (Bollgard II technology) sold in the country. What prompted a government, whose main theme is “Make in India”, to take a decision that creates a perception about its wavering commitment to IP and Technology Transfer in Agriculture sector in the country? There is no denying the fact that BG II technology has changed the lives of cotton farmers across the country. However, the technology has not lived up to the expectations in the last few years, thus affecting profit of farmers. It is probably this decline in the benefits accruing from the BG II technology that has led to the government’s decision.
On one hand, this decision will provide relief to 8 million cotton farmers in the country, even though the cost of seed accounts for less than 5% in cotton cultivation. It will also benefit the licensee to the technology in the country. In addition, non-payment of royalty fees by Indian seed companies is also a cause of concern for technology providers, who invest heavily in their R&D activities. This may also work as a dampener on innovation by companies as there will be less incentives to develop new technologies rather than reaping the benefits from them.
On the other hand, it raises more questions on the structure and duration of royalty fee payments. Does it make sense for the licensees (directly) and farmers (indirectly) to pay the royalty fees when the technology is not working satisfactorily, which can happen often in the agriculture sector? Will it not be more prudent to have a time frame after which the royalty fees need to be revised so that all stakeholders feel they are getting the best deal out of it? It is because in a country like India where agriculture supports 58% of the population, such cases can make or mar the technological landscape in the given sector.
Though all the stakeholders in the current decision have merits to their viewpoint, we believe that issues related to Intellectual Property Rights need to be dealt in a way that guarantees the incentives for innovation, technology transfer and licensing; especially in a country like India where these will, in future, be major drivers for growth in different sectors.