Monsanto's Adversary
If there is one individual that global agri-biotech major Monsanto dislikes the most in India, it is Mandava Prabhakara Rao, the 57-year-old Chairman of India's largest seed company Nuziveedu Seeds (NSL).
Rao, who also happens to be the President of India's largest domestic seed industry body, National Seed Association of India (NSAI), is considered by Monsanto to be the key man behind 'a systematic spread of misinformation' that has led to a host of government actions against Monsanto's business interests. It accuses Rao's company of breach of trust, non-payment of dues and attempted misappropriation of intellectual property rights (IPRs) - three issues, which under normal conditions, would have been just commercial disputes between two companies.
"NSL and NSAI led by Rao are engaged in a systematic spread of misinformation"
Unfortunately for Monsanto, Rao's defiance has larger implications. He is against the company's established practice of having bilateral private contracts for technology transfer of BT cotton seed and its revenue-sharing model with domestic partners. Monsanto had, until very recently, 49 sub-licensee partners, NSL being the largest of the lot and the toughest to deal with. Rao has also questioned the manner in which IPRs in seed technology are rewarded in India, and strongly opposes Monsanto's view that it should be governed under the patent law.
Rao believes intellectual property protection for seeds should be within the domain of the Protection of Plant Varieties and Farmers Rights Act (PPVFRA). The differences, therefore, find its roots in patents and patentability, and are not merely about a breach of trust or non-payment issues between two companies.
While the Centre seems to be supportive of the Rao-led domestic industry, Monsanto's position on IPR has the support of US trade negotiators, who are using every possible channel to put pressure on India to enact and implement rules that suit the interests of global agri-majors.
Raising the Stake
The seed industry, in fact, is closely monitoring the Monsanto-Rao duel and most players have taken one side or the other. Court litigations are on, government notifications are on their way, and the Competition Commission of India's (CCI) verdict is expected soon. If the government or the courts go with any of Rao's views, it can alter the business prospects of Monsanto, forever. And here lies the significance of the all out war that has broken out.
For global seed technology majors like Monsanto, the ongoing debate is a litmus test on patent protection, and market exclusivity. If the Indian seed industry tripled its size from Rs 5,000 crore in 2006 to Rs 15,000 crore in 2016, Monsanto's BT cotton technology was the major reason. With more innovative products in the offing (it's a different matter that India has not approved any other GM seed after cotton in 2002), and with Indian research institutions coming up with technology like GM mustard, technology providers do not want to let go of any opportunity that maximises their revenues as the industry explodes to new levels of growth. The merit of the allegations and counter allegations by the India arm of US-based Monsanto and Rao could be debatable, but there is no doubt over its long-term impact on the future of the Indian seed industry.
On Strong Ground
Rao is one of the best known faces in the seed industry. He has developed the family-managed business into the country's biggest player in hybrid cotton seed. Rao is well connected, too. And the government's decision to include him as a member in the reconstituted Protection of Plant Varieties and Farmers' Rights Authority on September 30 has only reaffirmed his proximity to the corridors of power.
Seeds of War
When Mahyco Monsanto Biotech, India (MMB) - the 50:50 joint venture between Monsanto and Maha-rashtra-based Mahyco - introduced and sub-licensed Monsanto's Bollguard I and II technologies to 49 Indian firms, NSL was one of the first to bag a contract. Today, 95 per cent of India's area under crop cultivation sows the hybrid seeds.
The flashpoint in the relationship between Monsanto-Mahyco and Rao started when NSL group companies, along with a few others - accounting for 53 per cent of the Indian cotton seed market - stopped paying the trait fee to MMB in 2015. The obvious fallout was the termination of the NSL contract, and demand for pending dues - claims of Rs 500 crore from eight companies. Subsequently, MMB moved the Delhi and Mumbai high courts.
Besides, when cotton growing states, including Maharashtra, Andhra Pradesh and Telangana, issued separate MRPs for cotton seeds and fixed the trait fees, MMB blamed Rao for it. The final nail in the coffin was the Centre's decision to have unified price control regime across the country through the Cotton Seed Price Control Order (CSPCO) in 2015.
The government's attempt to prescribe a sub-licensing and trait fee sharing format for the industry made matters worse. "NSL and NSAI led by Rao are engaged in a systematic spread of misinformation regarding MMB and licensing of cotton technologies in India that led to the enactment of CSPCO and various other government actions," says Dhiraj Pant, Technology Development Lead, Asia, Monsanto. Rao, however, refutes Pant's claims. "We are saying that Monsanto's stand is illegal. They (Monsanto) don't have a valid legal defence against what the government is doing. So, instead of giving a straight reply to that, they are trying to sabotage the law," says Rao, adding that the domestic industry is largely supportive of the stand taken by the Centre but they do not like price control. "We are supporting it because the Centre's actions are leading to only one conclusion - that there is some problem in the sector. The problem is that of monopoly. "
Cottoning Up
It is evident that the nature of the relationship between NSL and MMB was a marriage of convenience. NSL needed Monsanto's technology to develop disease-resistant hybrid cotton seeds, and Monsanto needed a smart company that had the potential to create leading brands - NSL brands, Mallika and Bhakti, were among the top five with 10 per cent market share in 2014/15. While Rao was willing to pay an upfront royalty fee to get the technology and even pay a trait fee, he was never comfortable with the Genetic Engineering Appraisal Committee's stipulation, which said that a no-objection certificate from the technology provider was essential for the approval of every cotton seed variety developed on the platform.
"We are not against technology...but don't want to encourage monopoly"
In fact, as president of ISIA, Rao had sought the Centre's intervention to stop this practice when NSL entered into a sub-licensing contract with MMB way back in 2004. Monsanto and other like-minded players, on the other hand, preferred the system because it provided a handle to keep control over domestic sub-licensees, in addition to the scientific reasons that GEAC had put forward.
However, the difference did not come in the way of the organisations to form an industry body, NSAI, in 2006. While Rao led ISIA was the largest, other associations that merged to form NSAI were led by Mahyco (Association of Seed Industries), MNCs like Monsanto (All India Crop Biotech Association) and Namdhari (Seed Association of India). A unified voice was necessary as the Indian seed industry was in a crucial phase of transformation. But the disagreements between Rao and Monsanto remained.
Monsanto was the first company to get GEAC approval for commercial application of its first-generation insect-resistant technology on cotton seeds. The use of the technology saw India become the largest exporter and the second largest producer of cotton in the world - the yield increased 1.8 times from 302 kg / ha lint in 2002/03 to 552 kg / ha lint in 2013/14.
Face Off
In 2009, Rao refused to pay the amount of trait value as per the license agreement with MMB after state governments started fixing the MRP for cotton seeds. His argument was that the reduction in MRP should have some reflection on the trait value. In response to his move, MMB terminated NSL's license agreement. Rao approached the Delhi High Court for a stay. When the court did not grant a stay, Rao had to pay the amount to reinstate the license.
In 2015, NSL again refused to pay the trait fee, but this time around it was not alone in defying Monsanto. The Maharashtra government had announced a cut in cotton seed prices, and had capped the trait fee component in the MRP. Monsanto-Mahyco approached the Bombay High Court, but could not get a stay on the government order. MMB terminated the contracts and initiated an arbitration petition in Mumbai seeking interim relief against seed companies and demanded a deposit trait value for 2015/16 according to its estimates. Rao filed a counter claim before the arbitration panel.
The battle has now reached the CCI. To Rao's benefit, the agriculture ministry has independently approached CCI seeking an investigation against MMB for alleged monopolistic and anti-competitive practices. CCI has clubbed the petitions and has initiated an investigation. Incidentally, NSAI affiliates and Rao's friends have obtained a stay on GEAC's practice of stipulating NOC for BT cotton hybrid seed approvals from the Hyderabad High Court.
At the Root
The government directives, of late, seem to be favouring the domestic industry. It is currently looking at provisions of PPVFRA - a law enacted in 2001 and enforced in 2006 to fulfil India's obligations under the Trade Related Intellectual Property Rights (TRIPs) Agreement of the World Trade Organization - as a possible solution to fix the trait value. "NSL has been spreading misinformation that PPVFRA was meant to protect or compensate trait developers. This is simply not true," counters Pant. The government is yet to take a final call on this. But to put the entire blame on Rao may not be correct as there is a much bigger lobby group within the BJP constituents and Sangh Parivar that is hell bent on opposing anything GM. "We congratulate the agriculture ministry for capping the prices of cotton seeds. The government intervened when there was a problem with its efficacy. We are not against technology or national or agriculture development, but we don't want any industrial sector to encourage monopoly in its name," argues Ashwani Mahajan, National Co-convenor, Swadeshi Jagaran Manch.
What the Future Holds
The prospects of a negative fallout were so disturbing for Monsanto that it has recently decided to withdraw its application for Bollgard II Roundup Ready Flex technology from India. Rao says that the withdrawal will not make any difference to the Indian seed industry and if PPVFRA becomes the key instrument in protecting IPR in seeds, the industry will do far better than what it has done so far.
"We had developed a trait with National Botanical Research Institute. We could not use it because the agreement with Monsanto said that we could not combine their trait with some other trait. Once the new regime comes into effect, NBRI will also have to make a claim under the new authority and the authority will fix the trait value. Once that happens, any company can use the trait. So more traits will come, and the combination of traits can also happen. It will benefit the industry, and farmers," says Rao. In a counter move, Monsanto and nine other like-minded companies announced the formation of a new association, the Federation of Seed Industry of India (FSII). But all eyes are on the government's next move, and the outcome of the ongoing litigations. Only time will tell who wins the final battle.
