India has cut the royalties that local seed companies pay to German drugmaker Bayer AG's Monsanto unit for the third time in four years.
The Prime Minister, Mr. Narendra Modi's government has decided to reduce royalties paid by Indian seed companies to Monsanto for its genetically modified (GM) cotton by 49 % to Rs. 20 for a packet of 450 grams, according to a farm ministry order. Earlier it was 39 rupees.
The decision could prompt Monsanto and other foreign seed companies to further scale back investment in the sector, said Mr. Ram Kaundinya, director general of the Federation of Seed Industry of India.
The decision comes at a time when India's cotton output is falling and needs a breakthrough to help maintain its leading position in the global cotton market, Mr. Kaundinya said.
The country's cotton output is likely to fall to 32.8 million bales of 170 kg each in the year to September 2019 - the lowest in nine years, triggering higher imports of the fibre, according to the industry group Cotton Association of India.