Sponsored by

Monsanto stock surges 7% after govt rolls back decision to cap GM cotton seeds

Shares of Monsanto India rallied sharply in early Tuesday trade, with the stock surging nearly 7 percent to touch a high of Rs 2,219.65, after the government a day before rolled back its decision to cap royalties paid by local firms to the company for purchasing the genetically modified seeds.

Despite shedding some initial gains, the Monsanto stock at 10 am still traded 4 percent higher at Rs 2,161.45 a share on BSE. Over 80,000 shares changed hands in early trades so far as against two-week average volume of 27,000 shares traded.

On Monday, India temporarily withdrew an order capping royalties on any new variety of genetically-modified (GM) cotton seeds, a government source said on Monday, bringing relief to U.S.-based Monsanto Co, the market's sole supplier.

"We are temporarily withdrawing the order," said the source, who is involved in the decision-making process but didn't wish to be named because he is not authorised to talk to the media.

 Monsanto stock surges 7% after govt rolls back decision to cap GM cotton seeds

In an order last week, the agriculture ministry said any company providing any new, advanced variety of GM cotton would not be allowed to charge royalties of more than 10 percent of the price of seeds, currently fixed at Rs 800, for five years from the date of marketing.

From the sixth year, the royalties, or trait value, will taper down by 10 percent every year.

Along with putting a lid on royalties, New Delhi also tightened rules that regulate the sale of GM cotton seeds.

The move was widely seen as another blow to Monsanto, the only company that sells GM cotton seeds in India, a leading producer and exporter of the fibre.

The government will now seek feedback from various stakeholders in the next 90 days before reaching a decision, said the source, who gave no reason for the decision to temporarily withdraw the order.

In March, India cut royalties paid by local firms for Monsanto's GM cotton seeds by nearly 70 percent and capped the price of its seed at Rs 800 for a packet of 450 grams after appeals by some state governments and farmers to lower the rate of the BT variety that commands 90 percent of the market.

The decision prompted Monsanto to warn it could consider pulling out of India. Shrugging off Monsanto's concerns, government ministers said India would keep regulating Bt cotton seed prices.

Separately, India's antitrust regulator has ordered an investigation into Mahyco Monsanto Biotech (India) (MMB), a joint venture with India's Mahyco, to probe whether the company had abused its dominant position as a supplier of GM cotton seeds.

Monsanto, the target of a $62 billion offer from Germany's Bayer, introduced a GM cotton variety in India in 2002 despite stiff opposition from critics who questioned its safety. GM cotton seeds catapulted the country to being the world's top producer and the second-largest exporter of the fibre.

Cotton is the only GM crop grown in India.

A Monsanto spokesman could not immediately be reached for comment.

With inputs from Reuters

Your guide to the latest election news, analysis, commentary, live updates and schedule for Lok Sabha Elections 2019 on firstpost.com/elections. Follow us on Twitter and Instagram or like our Facebook page for updates from all 543 constituencies for the upcoming general elections.

Updated Date: May 24, 2016 12:58:41 IST

Also See