This is with reference to the report, "Price control may stifle India's cotton seed industry" (January 15). Contrary to what has been mentioned in the report, no state law empowers a government authority to fix the royalty on cotton. Under separate, but nearly identical, laws applicable in Maharashtra, Andhra Pradesh and Telangana, the respective governments may fix the maximum sale prices (MSP) of various kinds of cotton seeds, including Bt cotton seeds, after taking into account various input costs. Trait value, which the report has called royalty, is one amongst many such input costs incurred in the production of cotton seeds. The laws neither empower governments nor is it practical for governments to fix the value of such input costs.
In the sole instance where the Telengana government sought to fix the trait value vide an order dated May 11, 2015, issued under its state law, the High Court for Telangana and Andhra Pradesh immediately stayed the parts of the orders that sought to fix trait value. That order remains in effect. The high court has in the past also issued several other orders indicating that the state government does not have the power to fix trait value. In 2013, it directed the state government to consider, while fixing the MSP, the contractually agreed trait value payable by seed companies. In 2011, the state law of Gujarat for regulating the price of cotton seeds was declared unconstitutional by the Gujarat High Court.
The trait value payable per acre in India is the lowest in the world. A well-established and mutually agreed mechanism for determining trait value has been in place for years and the current trait value recognises the overall MSP levels, which have been in place since 2011. The agreements with seed companies have been in place for decades now, based on a mutual understanding of the economic landscape and an appreciation of the value addition the technology provides.
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
All letters must have a postal address and telephone number