GM Cotton Monsanto
Cotton exports to witness 10% drop. Pictured: A farmer harvests cotton in his field at Rangpurda village in the western state of Gujarat, India, Oct. 20, 2015.Reuters file

The Karnataka High Court has said trait or royalty fee on seed technology is a private contract between two enterprises, and a Central government notification cannot intervene in it, according to media reports. The court was ruling on the Cotton Seed Price Control Notification (CSPCO) issued by the Central government March 8. 

"Fixation of trait value under the (government) notification shall not be given effect... since it would be a matter between (companies)... based on agreements entered into amongst themselves," the court order, granting stay on the Centre's notification, was quoted by the Mint as saying.

A plea filed by the Association of Biotechnology Led Enterprises Agriculture Group (ABLE-AG), an umbrella organisation of research and development (R&D) firms, had challenged Monday the legality and validity of CSPCO and its subsequent notifications at the high court. "The court while maintaining the maximum sale price (MSP) has directed that trait value charged by its members cannot be regulated, till final consideration given to the validity of CSPCO," said Dr. Shivendra Bajaj, Executive Director, in a note to International Business Times, India.

The Central government notification would reportedly have the biggest impact on U.S.-based Monsanto's India business venture MMBL (a member of ABLE-AG), which has 90 percent share in the country's genetically modified (GM) cottonseed market. Its royalty fee was cut by 73 percent and its GM Bollgard II cottonseed prices capped at Rs 800 (per 450 gram packet) from Rs 830-1,000 earlier. The reduction was primarily on account of royalty cut, said the Mint report.

Business Standard, however, reported MMBL has received some relief from the order, which has in a few ways questioned what goes into capping cottonseed prices. It quoted the court as saying: "...Though detailed consideration on that aspect of the matter would be required, prima facie it is seen that the trait value is not one of the components to be included for fixing the price."

However reports clarified that the broader intention behind the notification to bring down cottonseed prices in itself was left untouched by the court. It was seen as the government's effort to peg the MSP of the cottonseed to help 7 million cotton-growing farmers in the country.

"While making seeds available to farmers, the MSP  as notified in the [Centre's] notification shall be ensured and it shall not be exceeded," the high court was quoted by the Mint as saying.

Earlier, in response to the Centre's notification, ABLE-AG had said: "We strongly oppose the decision... By slashing trait fees, the government has clearly shown that it is going for short-term populist measures rather than supporting innovation in the long term."