India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

Whether this situation will soon change is unclear. While global seed firms, <strong>and</strong> some
<strong>India</strong>n companies, have patent applications pending for seed technologies, there are
significant resource constraints <strong>and</strong> a large backlog in the processing <strong>of</strong> applications by
the <strong>India</strong>n Patent Office. 36 Although the Patent Office has taken steps to reduce the
backlog in recent years, applications relating to biotech seeds reportedly have not been
included in the group <strong>of</strong> applications given priority for resolution. 37
U.S. <strong>and</strong> other global firms also are concerned about how effectively any IPR granted to
seed technologies will be protected. 38 Civil suits <strong>of</strong>ten take many years to conclude, <strong>and</strong>
the enforcement <strong>of</strong> judgments ultimately obtained is reported to be difficult. 39 Moreover,
<strong>India</strong>’s court system is reported to be extremely slow because <strong>of</strong> a large volume <strong>of</strong> cases
<strong>and</strong> numerous opportunities to challenge adverse rulings. 40
State Pricing Restrictions
Biotech seeds give rise to a market for both the seeds <strong>and</strong> the underlying technology. The
genetic technology is typically licensed by the technology producer to seed companies for
a “trait fee.” Seed companies insert the genetics into local varieties <strong>and</strong> then sell the seeds
to distributors or directly to consumers. Since <strong>India</strong> has no national laws or regulations
that restrict the price <strong>of</strong> either seeds or trait fees, the technology producers <strong>and</strong> the seed
companies should have an unrestricted ability to set prices. 41 However, this has not been
the case for Bt cotton, the first biotech seed approved for planting in <strong>India</strong>. A description
<strong>of</strong> the development <strong>and</strong> adoption <strong>of</strong> Bt cotton in <strong>India</strong> is provided below (box 9.2).
Controversies over the pricing <strong>of</strong> Bt cottonseed began in 2005. In January 2006, the state
government <strong>of</strong> Andhra Pradesh filed a complaint with the Monopolies <strong>and</strong> Restrictive
Trade Practices Commission alleging that the trait fees charged by Mahyco-Monsanto
Biotech (MMB) to seed companies <strong>and</strong> passed on to farmers in seed prices were too high.
After an early ruling in its favor, Andhra Pradesh issued a 2006 directive to all biotech
seed companies that limited the customer price for a packet <strong>of</strong> MMB’s first-generation
product, Bollgard I, to Rs. 750 ($17) per package, a substantial reduction from prevailing
prices that ranged from Rs. 1,600–1,800 ($36–$41). 42
Other states, including Maharashtra, Gujarat, Tamil Nadu, Karnataka, Madhya Pradesh,
<strong>and</strong> West Bengal, have been quick to adopt directives restricting prices in a “race to the
36 WTO, “Trade Policy Review <strong>of</strong> <strong>India</strong>,” 2007, 89. The U.S. Patent <strong>and</strong> Trademark Office also has a
significant backlog <strong>of</strong> patent applications for processing.
37 Industry representative, telephone interview by Commission staff, January 21, 2009.
38 <strong>India</strong> has been on the Priority Watch List <strong>of</strong> the U.S. Trade Representative because <strong>of</strong> weak IPR
protection <strong>and</strong> enforcement since 1989. Generally, however, U.S. concerns have focused on copyright
infringement <strong>and</strong> internet piracy, the counterfeiting <strong>of</strong> pharmaceuticals, the need for criminal IPR
enforcement, <strong>and</strong> the failure to enact a law protecting against the unfair use <strong>of</strong> test data, rather than seedrelated
IPR issues. USTR, “<strong>India</strong>,” Special 301 Report, 2009.
39 Industry representative, interview by Commission staff, Washington, DC, June 19, 2009.
40 USTR, 2009 National Trade Estimate Report on Foreign Trade Barriers, 2009, 242; industry
representative, interview by Commission staff, Washington, DC, June 19, 2009. The backlog is so substantial
that the chief judge <strong>of</strong> the High Court in New Delhi, which hears criminal <strong>and</strong> civil cases, recently stated that
it would take 466 years just to adjudicate all <strong>of</strong> the pending criminal cases at the present rate <strong>of</strong> resolution.
International Business Times, “<strong>India</strong>n Court Is 466 Years Behind Schedule,” February 7, 2009.
41 Singh, <strong>India</strong>: Agricultural Biotechnology, July 24, 2009, 8.
42 Sourav, “Monsanto at the Receiving End <strong>of</strong> Bt Cotton Pricing Policy,” July 14, 2006; industry <strong>of</strong>ficial,
e-mail message to Commission staff, August 25, 2009.
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