By Sourav Mishra and Bharghavi Nagaraju
India's hesitation to allow sale of genetically modified food and cash
crops other than cotton is crimping growth of the biotech-based seed
industry, players said.
After Bt Cotton received the nod in 2002, the government has withheld
approval for the commercialisation of any other genetically modified (GM)
crop.

Civil protests led to the Supreme Court staying multilocation trials
of GM food crops. India's stringent bio-safety norms have also been partly
blamed for the delay.

In the past, several state governments, including Andhra Pradesh,
Tamil Nadu, Gujarat, Maharashtra and Karnataka have tried to control Bt
cotton seed prices as cotton seed was an essential commodity.

However, the central government's decision to remove cotton seed from
the list in February prompted the Andhra Pradesh government to introduce an
ordinance to regulate prices in the state last week.

The ordinance aims to cut prices of the new Bt cotton seed variety,
Bollgard-II, by 21 percent to 750 rupees per 450-gram packet. Other states
may follow suit, say industry watchers.

"No clear policy directive, and state intervention into seed
marketing, has affected the revenue of seed companies drastically," said S.
Raghuraman, head of research with agri-sector research firm, Agriwatch.

The largest Indian GM seed company, Mahyco-Monsanto Biotech (MMB), a
joint venture between the Indian arm of Monsanto and privately held Mahyco,
reported a revenue decline of 62 percent to 1.5 billion rupees in 2006/07.

Monsanto India, which sells Bt technology to seed companies, has seen
revenues erode since 2004/05. Last year its revenue fell 7 percent to 3.09
billion rupees.

Bt cotton has found favour with a section of the farmers due to higher
yields and reduced pesticide costs. However, there is opposition to GM crops
on several counts, including higher cultivation costs.

Trade sources said more than half of the cotton area is expected to be
under GM cotton in 2007 crop season, but a high adoption rate will not be
enough for growth.

State intervention in fixing Bt cotton seed prices is to blame, said
M.K. Sharma, managing director of MMB.

"Although adoption has been higher, earnings will be comparatively
lower, thereby impacting new investments."

R&D Hit

Following Bt Cotton commercialisation, several seed companies have
been heavily investing, some as much as 15 percent of revenue, to develop
new GM crops, R.K. Sinha, executive director of industry body All India Crop
Biotechnology Association, said.

However, R&D spend will be hit if the government drags its feet on
commercialisation of new GM crops, say players.

"We spend a vast amount of capital on R&D prior to having a crop
approved for commercialisation," Sekhar Natarajan, Monsanto's India regional
lead said. "If the approval is delayed, then our return on investment is
also delayed".

"It would be difficult for any company in any industry to consider
bringing new technologies to India in a market where prices are set by the
state governments," Sharma said.


[in.reuters.com]