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AP Govt to regulate MRTP act over Monsanto

Jul '05
The Andhra Pradesh (AP) Government is seriously mulling options to curtail the exorbitant prices of Bt Cotton seeds, which have become a craze among cotton farmers in the state.

This includes using the provisions of Monopolies and Restrictive Trade Practices (MRTP) Act against Monsanto company.

The average price of Bt Cotton seed ranges between Rs 1,600 and Rs 1,700 per 450-gram packet in the local market as compared to Rs 350-Rs 450 of normal hybrid cotton seeds.

In the government's view, the steep prices of Bt Cotton seeds will blunt the cost competitiveness of local cotton in global markets.

The price of Bt Cotton seed includes the levy of Rs 1,250 as royalty on each packet by Monsanto, which owns the transgenic technology, towards the trait value.

The royalty is shared between the sub-licencees, which are the seed companies, and Mahyco Monsanto Biotech Private Limited (MMBPL), a joint venture company of Mahyco and Monsanto, USA, in a ratio of 30:70.

As per the clauses of the agreement, MMBPL reserves the right to fix the trait value every year and all companies are bound to charge the same trait value uniformly across the country.

The act of regulating the sale price to the consumer by fixing the royalty fee by Monsanto, therefore, is viewed as illegal as per the provisions of MRTP Act.

According to state officials, the government can intervene in this regard by using the provisions of MRTP Act and also of Competition Act of 2002 and can bring down the royalty component to anywhere between Rs 300 and Rs 400 per packet. This, in turn, will bring down the prices to around Rs 1,000 per packet.

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