Agri Business

Monsanto settles royalty dispute with 3 Indian cotton seed firms

OUr Bureau Mumbai | Updated on January 08, 2018

The arbitration process is on with Hyderabad-based NSL Group, and it still owes ₹144.9 crore to MMB

Mahyco-Monsanto Biotech India Pvt Ltd (MMB) has settled the royalty dispute with three cotton seed makers – Ajeet Seeds, Kaveri Seed Co Ltd and Ankur Seeds. The three companies have cleared payment dues of around ₹300 crore.

However, the arbitration process is on with Hyderabad-based NSL Group, and it still owes ₹144.9 crore to MMB.

MMB has licensed a gene to more than 45 local cotton seed companies in lieu of royalties and an upfront payment for producing genetically modified cotton seeds. MMB’s management control is with Monsanto India.

Monsanto India spokesperson said that in FY 2015 a limited number of sub-licensee seed companies had withheld a large sum of money due to MMB on suspicious grounds. While most of the early disputing seed companies had withdrawn their contentions after discussions with MMB as early as FY2016, disputes with a few other seed companies were referred to arbitration.

Unsuccessful bids

Of the five seed companies who have defaulted on legitimate payments due to MMB, three of the NSL Group companies singularly owe MMB about ₹144.9 crore. MMB has made several unsuccessful attempts to amicably resolve the bilateral dispute that resulted in such withholding of amounts payable under long-standing agreements. Currently, these matters are pending arbitration in various legal forums.

The spokesperson pointed that the licensing agreements between MMB and cotton seed companies for Bollgard Technologies for making seeds were mutually agreed and legally binding contracts, some of which were executed more than a decade back. MMB and the vast majority of its licensee seed companies have always honoured the letter and spirit of these agreements, which have been amended from time to time pursuant to discussions. MMB has been continuously engaging with all these seed companies, and in 2017, the disputes with most of them were amicably settled.

Acting on complaints by some local seed companies that MMB’s royalties were too high, the Agriculture Ministry last year cut the fees, which Indian seed companies had to pay to MMB.

Since then, Monsanto, which is being acquired by Germany’s Bayer for $66 billion, has been at loggerheads with the seed firms and the Centre. Monsanto has also again appealed against this decision, the hearing for which is pending in the Delhi High Court.

Published on October 12, 2017

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