ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Intellectual Property Rights in Plant Breeding and Biotechnology

The enactment of Intellectual Property Rights legislation and its enforcement are two distinct tasks, and the latter requires development of institutional capacity. The impact of IPRs should be seen in conjunction with economic policies and other regulations like seed and biosafety rules, which are also important for the growth and diversification of the Indian seed industry. This paper examines the implications of the Protection of Plant Varieties and Farmers' Rights Act of 2001. The expected impacts on plant breeding priorities, relations of public research with private seed companies and farmers, transfer of technologies by multinationals and seed prices are also discussed. It suggests that the public sector should learn to manage its IPRs to strike a balance between the efficiency and equity objectives.

Intellectual Property Rights in Plant Breeding and Biotechnology Assessing Impact on the Indian Seed Industry

The enactment of Intellectual Property Rights legislation and its enforcement are two distinct tasks, and the latter requires development of institutional capacity. The impact of IPRs should be seen in conjunction with economic policies and other regulations like seed and biosafety rules, which are also important for the growth and diversification of the Indian seed industry. This paper examines the implications of the Protection of Plant Varieties and Farmers’ Rights Act of 2001. The expected impacts on plant breeding priorities, relations of public research with private seed companies and farmers, transfer of technologies by multinationals and seed prices are also discussed. It suggests that the public sector should learn to manage its IPRs to strike a balance between the efficiency and equity objectives.


ndia has one of the most dynamic and diversified seed industries in the developing world. Strong public research and enabling government policies were the major factors contributing to the growth and diversification of the seed industry. On the one hand, the central and state governments directly supported plant breeding and seed production in public-sector organisations. On the other hand, private participation in seed industry was encouraged by adopting the policies of open access to publicly-bred material and fiscal incentives for investment in plant breeding. Liberalisation of imports of seeds and other planting material in 1988, and the economy-wide reforms of 1991 further strengthened the seed industry. The industry diversified further with the participation of multinational companies (MNCs) and increasing international seed trade [Morris et al 1998 and Pray et al 2001]. The seed industry (including private enterprises and public institutions) is now faced with the introduction of intellectual property rights (IPRs) on plant varieties and plant biotechnology. What will be the likely impact of the new IPR regime on the Indian seed industry; how can it contribute to diversifying the seed industry and to broader agricultural development objectives?

The IPRs are an important instrument of public policy that can provide incentives for investment in technology development, so in theory an IPR regime should contribute to growth of the seed industry and provide more seed choice to farmers. However, the literature is not particularly persuasive about this argument [e g, Lesser 1997] and the evidence for developing countries is particularly deficient. The impact of an IPR regime is determined by the nature and scope of the protection provided as well as the economic, agricultural and institutional circumstances of the country. India has evolved a dynamic seed industry without any IPRs; private seed companies invest an increasing amount of resources in plant breeding while public research continues to develop new products. In addition, the new IPR regime comes into force when Indian agriculture is undergoing further transformation. There is a focus on the diversification and competitiveness of agriculture and public policies and regulatory regimes are aligned with this objective. Commercialisation of genetically-engineered (GE) crop varieties is a recent phenomenon and the regulations in this field are bound to influence functioning of private seed companies. Similarly, the Seed Bill (2004) to amend the Seed Act is under consideration of the Parliament, and some provisions of the bill, like compulsory registration of varieties, will have important implications for the structure of the seed industry. Thus, the impact of the IPR regime cannot be seen in isolation from these other developments.

Notwithstanding the complexities associated with assessment of outcomes of IPRs, the debate has raised arguments from a wide-range of stakeholders that need to be addressed. Questions are being asked about possible impacts of IPRs on public plant breeding priorities, and the role of public research and its relations with private seed companies. Will the private seed sector remain competitive or will IPRs encourage concentration? Will seed companies invest in non-hybrid crops as a result of the legal protection of varieties? Will farmers have access to improved seed and associated technologies, and if so, at what cost? There is no hard evidence available to answer these questions, as IPRs are not yet fully operational in the country. This paper is based on the interviews with a wide range of stakeholders in the Indian seed sector and also draws on experience from other countries [Louwaars et al 2005]. The paper argues that there is a need to look beyond a narrow focus on IPRs and to take a holistic view of the seed industry, encompassing IPRs and other regulatory regimes as well as other incentives for seed sector development. The paper is organised as follows. First, it gives an overview of the new IPR regime, followed by a summary of other legislation in the seed sector and administrative and enforcement implications. It then analyses the potential impacts on private seed industry. This is followed by a discussion of the role of IPRs and other mechanisms regulating GE seed markets. Finally, the paper examines the options open to the public sector for promoting competitiveness of the seed industry in the context of strengthened IPRs.

IPRs in Plant Breeding

Scope and Status of IPRs in the Seed Industry

International: The agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) under the World Trade Organisation (WTO) requires that the member countries provide patents for any invention, whether process or product, in all fields of technology. For plant varieties, protection should be provided either by patents or by an effective sui generis (of its own kind) system, or some combination thereof. Since no criteria are established for an effective sui generis system, there is considerable variation among countries in protection of plant varieties. The International Convention for the Protection of New Varieties of Plant (UPOV) serves as the basis for protection of plant varieties in a growing range of countries.1 UPOV was established in 1961 to harmonise the legal systems for the protection of plant varieties in Europe. Since then, UPOV has been revised three times (1972, 1978 and 1991) to successively strengthen plant breeders rights (PBRs). Almost all UPOV members follow either the 1978 or 1991 convention. The 1991 convention introduces or extends several important restrictions. It allows the breeder to prohibit seed saving of protected varieties (unless the species is specifically exempted) and it excludes any possibility of seed exchange for protected varieties. It also extends the protection to any harvested material (if it has not been possible to exercise the rights on the planting material) and it extends the duration of protection (e g, from 15 to 20 years for field crops). By September 2005, 33 members followed the 1991 convention and 25 followed the 1978 convention. The community plant variety rights (1995) in Europe and the Plant Variety Protection Act (Amendment 1994) of the US conform with the 1991 UPOV convention, while most developing countries who are UPOV members have adopted some variant of the 1978 convention. Norway recently decided against “upgrading” its law to the 1991standards. In the US, plant varieties can also be protected by utility patents, whereas under the European Patent Convention, plant varieties per se are not patentable, but patent claims for broader plant groupings are allowable. A recent analysis of plant variety protection (PVP) shows that most activity is still confined to industrialised countries; applications in high-income countries peaked in the early 1990s while there is still growth in the number of applications in upper-middle-income countries [Koo et al 2004]. While most developing countries do not object to the idea that some form of protection should be provided to new plant varieties, issues of seed saving and exchange, research exemption, and use of domestic genetic resources, particularly by MNCs, have been the major issues of contention. Public debate has brought increased sensitivity to these concerns, and providing an appropriate benefit-sharing mechanism for sustainable use of genetic resources and striking a balance between the commercial and farmers’ interests are major challenges faced by the policymakers. Countries do not have to join UPOV to meet the requirements of TRIPS and a number of countries (e g, Indonesia, Tanzania) have enacted acceptable PVP legislation but have chosen not to join UPOV. India: The government has enacted all the necessary legislation to comply with the requirements of the TRIPS agreement. For protection of plant varieties, the Protection of Plant Varieties and Farmers’ Rights Act (PVFR Act, 2001) and the authority to oversee its implementation are in place. The act provides protection to a new variety including an “essentially derived variety” (a variety derived from another variety while retaining expression of its essential characteristics) and a farmers’ variety of specified genera and species provided it conforms to the criteria of “novelty, distinctiveness, uniformity and stability (NDUS)”. The act also has a provision for protection of an “extant variety”– a variety already notified under the Seed Act, farmers’ variety, or a variety

Table 1: Cost of Establishing and Maintaining PVP Rights

(in $)

Item China Colombia India Kenya EU US*
Application 217 233 200 1,115 432
Testing 556 1,396 Up to 1,111 600 1,265 –
(155 if done 1,490
abroad) (depending on 3,220
type of crop)
Granting of rights 3 9 240 682
Annual maintenance fee (1-3): 181 (1): 78 Individual: 111, (1-20): 200 (1-20): 540 None
(by year) (4-6): 236 (2): 155 educational: 156, (flat rate
(7-9): 306 (3): 233 commercial: 222 beginning 2006)
(10-12): 398 (4-20): 311
(13-15): 517
(16-18): 672
(19-20): 874
Cost of PVP and 3,340 4,311 Individual: 2,221; 3,040 7,780
10 years of protection educational: 2,671; (lowest 4,344
commercial: 3,331 example)
Cost of PVP and 5,687 5,866 Individual: 2,776; 4,040 10,480 4,344
15 years of protection educational:

Note: * One $ = Rs 45.

Source: Louwaars et al (2005); web site of the European Community Plant Variety Office ( (fees converted at 1.24$/euro); web site of Plant Variety Protection Office of USDA (

about which there is common knowledge or is in public domain. The act confers an exclusive right to the breeder or his successor, agent or licensee, to produce, sell, market, distribute, import or export the variety for a period of 15 years (18 years in case of trees and vines).2 The act has a unique provision of benefitsharing to recognise the rights and contributions of local communities and farmers to conserving genetic resources. Further, the act not only extends PBRs to farmers for developing a new variety, but also permits farmers to save, use, exchange, share, and sell unbranded seed of a protected variety. There is a researchers’ exemption also, allowing the use of a protected variety for developing a new variety. Although UPOV will no longer accept applications from new members under the 1978 convention, it has agreed to make an exception for India because India started the process of developing its law before the closing date. It remains to be seen if UPOV accepts some of the act’s unique characteristics as consistent with the 1978 convention. Some observers feel that the act’s requirements of disclosing the source of genetic material and depositing seed and parental lines of the protected variety with the national gene bank, along with extensive farmers’ rights to sell seed and compulsory licensing have diluted the “private” interest.

India has also amended the Patent Act (1970) for the third time in December 2004 (earlier amendments in 1999 and 2002) to allow both process and product patents in all fields of technology, including biotechnology.3 The patent granted under this act confers upon the patentee exclusive rights to prevent a third party from making, using, offering for sale, selling or importing for those purposes that product, or the use of a patented process, in India. The term of every patent granted shall be 20 years from the date of filing of patent application. The act specifies a number of inventions which are not patentable, and for agriculture these are: “a method of agriculture and horticulture”, and “plants and animals in whole or any part thereof other than micro-organisms but including seed, varieties and species and essentially biological processes for production or propagation of plants and animals”. However, any process to control a plant disease or to increase economic value of plants or their products can now be patented. This provision, coupled with the scope for patenting of a microorganism which is not a naturally occurring organism, leaves the Indian Patent Act open to patenting of DNA sequences and gene products developed after substantial human intervention and conforming to the general conditions of patentability. It is quite likely that biotech companies will test the contours of the act in the court of law, and eventually may succeed in their pursuit to protect biotech product innovations such as genes. This will have important implications for the plant breeding industry in general, and biotech industry in particular. It is feared that broad and strategic patenting by biotech companies may erect formidable entry barriers in biotechnology, promoting monopolistic control over the seed industry.

Other Legislation

The provisions in the PVFR and the Patent Acts are also harmonised with other international agreements relating to biodiversity and trade through the Biological Diversity Act (2002) and the Geographical Indications of Goods Act (1999). Asserting ownership rights on genetic resources and sharing of benefits accruing from their use is a major issue. The Biodiversity Act spells out the procedures for accessing genetic resources, especially for foreigners and private seed companies, and the PVFR authority will exercise its powers to decide the terms and modalities for sharing of benefits arising from commercial use of the national genetic resources. The Seed Act is also under revision to make it consistent with PVFR and biodiversity acts. The Seed Bill (2004) has proposed compulsory variety registration and mandatory declaration of GE seed. Farmers are permitted to save, use, exchange, and sell unbranded seed of a protected variety. The bill does not make seed certification compulsory, although there is a provision for self-certification by seed producing agencies and certification by the state seed certification authority, or any other agency it has accreditated for this purpose.

The Seed Act basically addresses seed quality (genetic and physical purity, germination, etc) and is being revised to make it consistent with PVFR Act. The objectives and scope of PVFR and Seed Acts are distinct and the latter does not overrule the provisions in the former, despite the concerns of some observers [Cullet 2005]. Compulsory variety registration under the Seed Bill (Section 13.1) restricts seed sale to varieties of known origin with proven economic advantage (established under all-India trials and information provided by the breeder/producer). This registration will not establish ownership rights, unless application is made under PVFR, and therefore, any registered producer can multiply and sell seed of a registered variety with the same name. Educational, scientific and extension organisations are exempted from all or any provision of the act, and therefore, from registration of a variety if required in some cases, and farmers are exempted from any restriction on their rights to save and exchange seed (Section 43). This may allow flow of breeding material directly into farmers’ seed system. Farmers’ seed is supposed to meet certain quality standards, but such concerns are neither feasible nor warranted, as farmers’ seed is not generally inferior to commercial seed. There is also concern that the new Seed Act may bypass the biosafety rules, allowing GE seed to enter the environment through provisional registration, which is not true. Section 15(1) of the bill clearly states that provisional registration of GE variety will be granted for only two years on the basis of multi-locational trials, and the variety will be registered (and hence available as commercial seed) only after the applicant has obtained biosafety clearance required under the Environment (Protection) Act (1986). Farmers’ rights also apply to a GE variety and these cannot be restricted if the variety is developed using a protected gene. Indeed, potential owners of a protected gene may be concerned that there may be no way of keeping such a gene from being incorporated in unregistered or unprotected varieties that spread informally through farmer-to-farmer exchange.

Administration and Enforcement

The strength of an IPR regime is based not only on the scope of protection provided by legislation, but also by administration and enforcement capacities. Smooth implementation of an IPR regime requires adequate technical, human and institutional capacity. Although the government is upgrading the physical infrastructure and increasing the number of examiners in various implementing agencies, viz, patent and trademark offices, and providing resources for the PVP authority, technical and human capacity is still inadequate to deal with the pressing demand and technical complexities presented by the PVFR Act and changes in the patent law. Some researchers have experienced inordinate delay in responding to their patent applications, and therefore, they prefer to file through the Patent Cooperation Treaty (PCT), which is more efficient. In addition, there is an additional advantage of facilitating protection in other member-states of PCT, some of which have a patent regime that is stronger than that of India.

The implementation of PVFR Act poses some major challenges. The first is to organise the testing for distinctiveness, uniformity and stability (DUS) for a large number of varieties in a transparent and credible manner. This work shall be outsourced to ICAR/SAU system, which is already under stress due to superannuation of scientists and increasing demands on the management of the All-India Coordinated Trails for testing varieties for value for cultivation and use (related to the provisions of the new Seed Act). The DUS testing will further stretch the resources of public plant breeding programmes, and recruiting more scientists seems unlikely under the present government policy. International cooperation provides an opportunity to reduce the cost of testing, particularly when related to foreign bred varieties. For example, UPOV member countries share their test reports, and countries like Kenya and Colombia purchase test reports for flower varieties from abroad. India could also use the international test data for vegetables and flowers – the sectors likely to benefit from introduction of foreign varieties. But for most other crops, demand for DUS testing will largely come from huge domestic plant breeding industry and therefore, substantial public investment in DUS testing facilities is inevitable. Regional cooperation could reduce the burden or create a sharing of costs.

China has made a considerable investment in personnel (about 100 full-time breeders for DUS testing) and the India case will be at least as great.

The PVFR authority should be self-sufficient in terms of meeting its cost. In a large country like ours, plant breeders that expect a sizeable market for their seed will be willing to pay application fee and maintenance charges, but subsequent renewal of the rights will depend upon market conditions. Given a nominal annual maintenance cost of Rs 10,000, it may not be too expensive for a private seed company to maintain its rights over a long period for major crops. The total cost of establishing and maintaining PVP right in India for 15 years would be $ 4,440, as against $ 5,687 in China and $ 4,344 in US (Table 1). However, in India, there is an additional cost of Rs 90,000 for testing a variety for three years under the All-India coordinated trails, thus raising the cost to $6,441. It is not clear if small players catering to niche seed markets will be able or willing to invest in protection of their varieties. Discounts on fees offered to education institutions and individual breeders may provide some hope for survival of small seed companies, whether private or public.

The PVP is a private right and its enforcement is not usually under the purview of the PVP office. The experience in developing countries has been quite varied because of inadequate institutional capacity and inefficiencies in the enforcement system. Given India’s past experience with the patents and trademarks, there is no reason to believe that the initial enforcement of the PVFR Act will be stringent. Once the right holders recognise their responsibility to identify the infringements by their


competitors and pursue cases, enforcement tends to improve. It is quite likely that a similar situation may develop in India and court cases will serve to educate the system about the issues involved. But the development of this institutional capacity entails substantial investment by both the innovators and the institutions responsible for enforcement of the IPR regime.

Protection of Farmers’ Varieties

Empowerment of farmers and rural communities to protect their rights over genetic resources has been a major objective of the Indian legislation, and the challenges to make these legal provisions operational are well articulated [Swaminathan 2002]. The PVFR authority can evolve a mechanism to share the benefits with farmers and rural communities. However, the effective protection of a variety bred by farmers4 is still a grey area. This requires selection or development of a new variety (or improving landraces), developing passport data, testing and protection of the variety, and commercial seed production, or licensing to a seed agency. These are difficult tasks for an ordinary farmer or farming community. Also, most of the landraces have been explored and documented by the public research system. Even if there are some unexplored landraces which can be improved and identified for a niche area, often small in size, these may not meet the criteria of formal release of a variety, and their commercial market may not warrant the costs of protection. Therefore, one should not expect much demand for protection of farmer-bred varieties. However, this does not imply that farmers should forego their rights as owners of genetic resources or as breeders. The best way to address this issue could be to register farmers’ materials and facilitate their exchange and use by plant breeding programmes. The benefits arising from commercialisation of varieties based on these genetic resources should be shared with farmers. The institutions like Krishi Vigyan Kendras, civil society organisations, and panchayati raj institutions can help explore and document the materials conserved and improved by farmers and rural communities. The Honey Bee Network and National Innovation Foundation have ably demonstrated this [Gupta 1999]. The main lesson learnt is that public and civil society organisations should work in partnership with rural communities for sustainable use of genetic resources and equitable sharing of benefits arising from their commercialisation.

IPRs and Private Seed Industry5

Shift in Plant Breeding Priorities

The PBR and patents are among several mechanisms for protection of intellectual property in plant breeding industry. Private seed companies also use non-IPR mechanisms like biological protection (e g, hybrid technology), trademarks, trade secrets and contracts which may be equally effective. Hybrids are products of two or more (inbred) parents, and they offer two distinct advantages for protection. Hybrid seed will lose yield potential and uniformity of the crop in subsequent generations, which drastically reduces farmers’ incentives for seed saving. In addition, the competitors require an access to inbred lines for duplication of a hybrid. The owner can protect inbred lines by maintaining their secrecy, as well as close monitoring of seed multiplication plots.6 If a breeder is able to maintain an exclusive access to genetic material (in the absence of patents or PVP) then contracts can be used to control seed saving or the further use of the germplasm in breeding programmes. For instance, the ability to control wholesale flower markets in Europe means that flower breeders can use grower contracts to prohibit the unauthorised multiplication of planting material. The field crop seeds in the US are increasingly sold under bag-tag or shrink-wrap contracts that often prohibit re-sowing of the seed. The MNCs often provide access to their biotechnology under contracts that carefully define the ways in which the technology can be used.

The non-IPR mechanisms such as hybrids, trade secrets and contracts, coupled with favourable government policies and expanding seed markets, have in fact contributed to the growth of private seed industry in India [Morris et al 1998; Louwaars et al 2005]. The private sector now supplies more than 85 per cent of commercial seed of high value hybrid crops like cotton and maize, and more than 60 per cent of self-pollinated crops like paddy in the major producing states (Table 2). Therefore, the PVFR Act alone may not have significant impact on the growth of the hybrid seed industry, except that by providing an additional protection to parental lines it will address the current problem of the theft of a company’s inbreds from commercial seed multiplication plots. The act may also encourage foreign companies to share their single cross hybrids with affiliates in India, or help introduce elite breeding material by MNCs and encourage investment in high value export crops like flowers.7

A more difficult issue is the degree to which the PVFR Act will encourage the private sector to invest more in plant breeding for open pollinated varieties (OPVs) whose seed, unlike that of hybrids, can be easily saved. Most varieties of crops such as wheat, rice and pulses are OPVs, and although there is an increasing private sector participation in the multiplication and sale of such seed, the varieties are mostly public. The experience of other countries indicates that a major shift in private plant breeding priorities towards OPVs, particularly in foodgrains, is unlikely. This is confirmed by a wide range of interviews with seed industry stakeholders by the authors. Particularly where PVP legislation permits seed saving, the incentives for investment in OPVs is low. An analysis of the impact of PVP on the private seed sector in the US indicates some increased investment in soyabean breeding but little change in the level of private wheat breeding [Butler and Marion 1985; Alston and Venner 2002]. China has had PVP legislation in place since 1999 and although there has been a significant increase in private plant breeding

Table 2: Trends in Supply and Use of Commercial Seed

Crop State Private Sector’s Share in Area Planted with
Total Commercial Seed Commercial Seed
(Per Cent) 2002 (Per Cent)
1996 2002

Paddy Andhra Pradesh 27 81 45 Haryana 46 60 60 Cotton Andhra Pradesh 9 1 9 9 5 9 Maharashtra 62 72 64 Gujarat 78 85 53 Haryana 92 90 50 Groundnut Andhra Pradesh * * 16 Gujarat * * 2 Maize Himachal Pradesh 4 3 1 0 2 0 Uttar Pradesh 1 4 9 4 8 Tomato Himachal Pradesh Na 79 76

Note: * Negligible share. Source of maize seed in HP varies because seed is procured through open tenders.

Source: Compiled by the authors from various government records and NCAP survey.

little of this is devoted to OPVs. There are some exceptions to the general rule. Colombia has half-a-dozen domestic private companies producing OPV rice varieties, and although most were in business before the establishment of PVP, the legislation has strengthened the industry. Some Indian private companies have their own OPVs of rice, cotton and vegetables, and they will surely apply for PVP, but there is no indication that they will intensify their breeding activities for OPVs in near future. One of the attractions of the OPV market for many companies is to get a foothold in the potential hybrid market for these crops by producing seed of public (or private) OPVs. This is already happening in the case of rice [Tripp and Pal 2001] and may expand to mustard, soyabean, pigeon pea, etc.

Structure of the Industry

The impact of IPR legislation on the structure of the seed industry is less clear because this is driven not only by the strength of seed companies in terms of ownership of IPs, but also by technological advancements and relationship between public and private sectors. The policy of “open access” to public varieties has contributed to competitiveness of the Indian seed industry in the past, and it is unlikely to change in the near future at least for domestic market. However, there has not been a uniform open access to advanced breeding lines in the immediate past. Now the exchange of genetic resources will be facilitated under the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA).8 We need to see how this treaty together with the introduction of IPRs will affect the exchange. One way in which the IPRs may encourage concentration is that small companies may find the cost of maintaining PBRs beyond their capacity, discouraging them from investing in plant breeding. One option for them could be to enter into contractual arrangement with large seed companies, or public breeding programmes for access to new varieties. The PVFR Act in this situation may facilitate the contractual arrangements between seed companies, eventually evolving some kind of technology or innovation markets. However, it is also possible that the technology providers may not find it worthwhile to register and protect a variety with limited market potential, thereby reducing the options available to the small companies. Thus, small plant breeding companies (and public breeding for niche markets) appear to be the most likely losers in the emerging scenario. On a more positive note, other likely losers from strengthened IPRs would include those small operators who work on the margin of the industry and sell seed of private varieties (under their own labels and nomenclature) acquired by unauthorised means, creating confusion and mistrust in the seed market.

Consolidation through mergers and acquisition (MAs) of companies is another major factor contributing to the concentration in seed industry. This process eventually leads to concentration of IPRs, both genetic resources and associated plant breeding technologies. The process started quite rapidly in developed countries and now impinges upon seed industry in developing countries [Srinivasan 2003]. In India, after initial expansion of private seed industry through research spillovers (both from public and private sectors) and divisions, the process of consolidation started quite early and became intensive during the 1990s. At the beginning, MNCs acquired some large national seed companies, which were further consolidated by MAs taking place globally. This process led to concentration of germplasm and

Figure: Per Cent Distribution of Farmers According To Seed Replacement Frequency

After 4 years 17 per cent

Every year 30 per centAfter 3 years 21 per cent Alternate year 32 per cent

biotechnological innovations in the hands of a few large seed companies, mainly MNCs.9 Although the concentration process intensified much before the implementation of the IPR regime in India, it is certainly possible that IPRs will contribute further to these trends.

Limits to Seed Saving

Liberal farmers’ rights and privileges in the PVFR Act are often cited as being contrary to the interests of private plant breeding, but discussions with the major players in the industry have revealed that this is not seen as a problem as long as seed saving and exchange is confined to traditional farmer practice. The private seed companies believe they can compete with traditional seed system by providing seed of high purity and excellent quality, including seed treatments for better germination and disease control. But if the practice of selling unbranded farmsaved seed escalates to the extent that it poses a threat to commercial seed business, there will be pressure to restrict this practice. For instance, the informal seed sale by large commercial farmers and grain traders has reduced demand for commercial seed of rice and wheat in Colombia and Kenya, respectively, and there are calls from the commercial sectors to make their PVP regimes compliant with UPOV 1991. For export crops like flowers, on-farm multiplication and use of planting material can easily be restricted by entering into some kind of contractual arrangement with the producers and monitoring export markets. But these measures may not be very effective for the substantial domestic market in India. This is one of the reasons that the US and EU attempt to insist on “TRIPS-plus” in bilateral trade negotiations, pressuring countries to adopt IPR regimes that go beyond the TRIPS requirements, such as UPOV 1991 or even patenting varieties. An effective way to address the problem of providing extra protection for certain commercially important crops could be to structure IPRs in such a way that they differentiate among different classes of crops (e g, food vs non-food), and/or farmers.

Seed Quality and Prices

The growth of the seed industry has improved availability of quality seed, and farmers now have access to a wide range of material from various sources (public, private, local cooperatives, etc). A nationwide survey conducted by the National Sample Survey Organisation [NSSO 2005] has shown that for the country as a whole nearly half of the farmers buy seed from various sources and the remaining half used their farm-saved seed or seed exchanged with fellow farmers. Furthermore, nearly two-thirds of farmers usually replace seed either every or alternate year (see the figure). The farmers also opined that required quantity of seed was available in right time. Two-thirds of the farmers classified quality of the seed as “good” and remaining one-third found it “satisfactory”. Less than 1 per cent of the farmers said that seed quality was “poor”. Although the survey provides a broad scenario of farmers’ seed acquisition and replacement practices, questions still remain about farmers’ preference for commercial seed. Official data of Andhra Pradesh show that the private sector supplied about two-thirds of the total seed for all crops in 2001-02, and the quality of seed was not inferior to public seed.10 Our suvery for paddy in the same state indicates that in the dominant paddy growing areas, more than half of the farmers buy commercial seed and 58 to 85 per cent of them buy for quality resaons [Tripp and Pal 2001].

Has the growth of the private seed industry been associated with a rise in seed prices? As seen from Table 3, seed-to-grain price ratio of hybrid seed is much higher than that for OPV seed, at least in part because of the higher production costs of hybrid seed. The price ratio has doubled during the 1990s for the crops like cotton and maise where the growth of private seed supply was rapid, and the ratio for these crops is almost three times of that for the crops like paddy, groundnut and pulses, where public or traditional seed system is dominant. Part of the increase in seed prices can be attributed to higher seed cost in private sector, owing to risk premium associated with volatile seed demand, a premium to recover past R&D investments, and the to include a profit margin. But one cannot overlook the fact that seed prices have increased much beyond the expectations. This is evident from the fact that seed price of proprietary cotton hybrids (Rs 950/kg in 2004) popular in Maharashtra was three times that of the public hybrids (Rs 340/kg). The price of Bt cotton seed was nearly four times the price of non-Bt cotton. Even the seed of public OPV cotton was sold by private sector at a price nearly five times of that charged by the state seed corporation. This shows that increased privatisation of seed industry was associated with increasing seed prices, which is likely to continue, and the cost for establishing and maintaining PVP rights will add to seed cost. Thus, there is a need for monitoring of seed industry in this regard. Any tendency of monopolistic pricing due to concentration of the industry or the (mis) use of IPRs should be controlled by effective intervention by the government.

Regulation of GE Seeds: The Case of Bt Cotton

Role of Biosafety Regulations

The regulation of GE or transgenic crop varieties has been a matter of concern in developing countries, including India. Widespread cultivation of illegal and spurious Bt cotton in India and herbicide tolerant soyabean in Brazil have shown the complexity of the problem. The concern still remains for putting in place an effective mechanism to regulate GE seeds. In India, this comes under the purview of the Environmental Protection Act (EPA, 1986) dealing with the biosafety issues, and the Seed Act (under revision) mainly controlling seed markets. The biosafety aspects in R&D are overseen by the review committee on genetic manipulation under the department of diotechnology (DBT), while the genetic engineering approval committee (GEAC) under the department of environment, forests and wildlife approves large-scale use/commercialisation of transgenic crop varieties. The biosafety regulations are meant to control the introduction of transgenes in the environment, regulate international trade in living (seed/grain) GEs, and guard against negative effects on environment and human and animal health. Environmentally safe GE products with significant economic advantage are allowed for commercialisation. The regulations verify the gene product(s), its source and authority to use (e g, prior-informed consent of the owner or patent holder). The biosafety regulations are not meant to substitute for IPRs. However, in the current absence of IPRs for transgenic crops, biosafety data has been used to control commercial use of GE technology. The data on the biosafety impacts generated during expensive field and laboratory trials of a transgenic variety are exclusive to the concerned seed company (the officials treat them confidentially). In the case of Bt cotton technology in India about 20 private seed companies thus needed to sub-licence the Bt gene of Mahyco Monsanto Biotechnology, which has now become a technology providing company. These companies transform their hybrids with the sublicensed gene and gain access to the biosafety data as part of their contract with the technology provider. Otherwise, they could not obtain a biosafety clearance to commercialise their varieties. This means that the biosafety system provides the technology provider a patent-like right even in the absence of an effective IPR.

Role of IPRs and Seed Act

Although access to biosafety data can be used to structure contracts and license genes, biosafety regulations are not adequate to control the unauthorised use of transgenes by unscrupulous companies or individuals. If a transgene is incorporated in a variety that is sold in the informal seed market this contravenes biosafety regulations, but the state and district-level biosafety committees are not well-equipped to check such illegal commercialisation of GEs. These committees at best can support other efforts like those made by seed companies pursuing legal action against infringement of their IPRs. If the courts decide that India’s new patent law permits gene patents then companies can control both the formal and informal use of their genes by competing enterprises and individuals. But a strong patent regime will increase entry barriers in the industry by reducing the freedom to commercialise a product involving third party IPRs. For example, the National Botanical Research Institute (NBRI) has developed its own Bt gene and licensed it to a group of private seed companies for use in cotton. But the agreement is on hold because of uncertainties regarding freedom to operate in the new patent regime. Another major disadvantage of a strong patent regime is that it could eventually restrict saving and exchange of seed by farmers [CIPR 2002]. This should be resisted, and there are examples from industrialised countries (e g, the recent EU Biotech Directive 98/44) showing that farmers’ privilege of

Table 3: Share of Seed Cost and Seed-to-Grain Price Ratio

Crop Share of Seed Seed-to-Grain Price Ratio*

Cost in Total Average Ratio Actual Ratio, 2003 Cost of Cultivation 1991-93 1997-2000 OPV Hybrid (Per Cent)

Paddy 6.6 1.34 1.86 3.0 22.6 Maize 7.7 2.11 5.49 3.1 5-13 Cotton 7.6 3.16 6.35 2.2-12.1 37.4** Gram 26.7 1.53 1.63 2.1 – Groundnut 30.4 2.43 2.28 1.9 –

Notes: * Based on average costs and prices for the major states. For cotton, the ratio is computed using lint prices. ** Ratio for non-Bt cotton seed.

saving seed can effectively be exercised even under a strict IPR regime that recognises gene patents.

In practical terms, the new Seed Act could prove more effective in controlling illicit sale of GE seeds. First, no GE variety will be registered under the act and hence allowed for seed sale unless cleared by GEAC. In addition, the act will be applicable at the point of seed sale for which there are well-laid out implementation procedures for quality control, including testing of GE seed, and penalties for any violation. Unfortunately, current point-of-sale inspection is ineffective [Tripp and Pal 2001] and there is a need for strengthening this system by training of seed inspectors and analysts in the use of modern seed testing methods, especially testing of GE seeds and providing adequate financial resources. More effective implementation coupled with involvement of farmer groups, civil society organisations and association of seed companies would make the system more participatory and accountable. All these efforts can be coordinated at the state and national levels to strengthen the function of the proposed agricultural biotechnology regulatory authority [GoI 2004].

Strategy for the Public Sector

What should be the strategy of the public research system to respond to the challenges of strengthened IPR regime? There is no simple answer to this question, and much will depend upon shifts in breeding priorities of the public sector and its relations with private seed companies. This section discusses these impacts and suggests a strategy for the public sector to respond to the emerging challenges.

Policies and Management of IPRs

The strengthened IPR regime has several important implications for public plant breeding and seed organisations. The foremost requirement is to develop an IP policy for the Indian Council of Agricultural Research (ICAR) and State Agricultural Universities (SAUs) and to strengthen institutional capacity to manage their IPs. The IP policy should address three important goals: revenue generation, recognition of achievement and technology transfer. These goals may not always be compatible and therefore, development of an IP policy is a challenging task. The guiding principle should be that the public system should use its IPs and other resources to reduce entry barriers in the industry and enhance farmers’ access to improved seed. The ICAR/SAU system should also have adequate technical and institutional capacity to protect and enforce their IPs, and also learn to determine its freedom to operate and to access protected material and technologies, particularly from the private sector. This is especially important for biotechnology where most of research methods and products are in the hands of private sector of the north. The cross-licensing, strategic public-private partnership and licensing of a technology for the market unlikely to attract private attention could be the possible options to deal with this issue [Fischer and Byerlee 2001]. Also, there is a possibility to develop south-south cooperation to learn from each other’s experience and effectively compete with monopolistic tendencies.

Breeding Priorities and Resource Generation

There are possible revenue generating opportunities for public breeding programmes by charging royalties on their varieties and breeding lines used by private seed companies. The Chinese experience has shown that even in a short period of time, public organisations can protect a large number of varieties and generate revenue by commercialising them11 [Koo et al 2003]. International agricultural research institutes like the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) have also established strategic partnerships with private seed companies for sharing research facilities and breeding of advanced material on fee-for-service basis. Given the productivity of Indian public plant breeding programmes and popularity of public varieties, there is ample scope for revenue generation. This, however, requires adequate institutional capacity to manage and enforce these rights, and system-wide capacity development for this will take some time. At the same time, one should not ignore the fact that opportunities for commercialisation will also attract private investment in plant breeding, and the public sector will be in direct competition with the private sector. This puts limits on the capacity of public sector to generate a substantial amount of revenue. Moreover, in the quest of revenue generation the public system should not divert its attention from the responsibility of creating “public goods” and serving resource poor farmers. The public breeding programmes have so far resisted this temptation and managed to strike a balance between the efficiency (breeding for commercial crops) and equity (breeding for subsistence crops) objectives. Although there are instances of shifts in public plant breeding strategy towards hybrids in the past, especially for corn, cotton and rice, and now for wheat, this was influenced by potential yield advantage of hybrid technology and not by the objective of revenue generation. Breeding for OPVs of subsistence crops is still an important objective and interviews with public research managers provided no evidence that it will be compromised in the era of strengthened IPRs. There could however be a shift towards strategic and pre-breeding germplasm-enhancement research in the long run, which is a trend in countries with an advanced seed industry.

Relations with Private Seed Companies

The public sector research may provide finished products (varieties) or breeding lines and other technology to the private sector. In the former case, the public research system in India has encouraged use of its varieties by private seed companies in a transparent manner. There is a well-established system to acquire source (breeder) seed of public varieties. It is quite likely that there will not be any change in this policy, although the public system may insist that private seed companies maintain the identity and nomenclature of the public varieties and may ask for royalties if the varieties are commercialised outside India. On the other hand, private seed companies are strengthening their own breeding programmes to differentiate their products in the market. Thus, both the public and private sectors would be competing for limited resources, both scientific and genetic. Therefore, public breeding programmes should avoid duplication of efforts and make a wider range of products available for various segments of seed markets. The past experience of the provision of public breeding lines has shown that some of the public programmes have shared advanced breeding material with private sector, contributing to competitiveness of the seed industry. There are also instances of restricted access to public inbred lines and other semi-finished products, which slowed down overall breeding efficiency of the industry, contributing to the dominance of a few seed companies. This problem of restricted access to public material now can be addressed when the material will be shared through material transfer agreement (MTA) and there is a provision in the PVT Act of declaring source of genetic material for registration and protection of a variety.

Besides continued germplasm support, many companies would look forward to research partnerships with the public programmes in strategic research. Successful examples in the past are upscaling of hybrid rice technology and potato breeding for chips-making quality. Among the CGIAR centres, ICRISAT has established consortia of private seed companies (national and MNCs) for breeding of pealmillet and sorghum in 1999. The members pay annual fee and have an access to the entire breeding material. The ICAR/SAU system has also free access to all the material, while non-member seed companies have an access to some material. The model is quite successful and a third consortium for pigeon pea was started in 2003. There are instances when private seed companies look to the public sector for facilitating access to proprietary technologies which are beyond their means. Alternatively, seed companies can enter into a partnership with the public sector for developing such technologies. The NBRI example, though on hold because of lack of freedom to operate, indicates that private seed companies see the partnership as an opportunity to reduce transaction cost and risk associated with a technology development, while the public sector finds it useful for transfer of a technology and revenue generation. A mechanism of cost and benefit sharing would further help develop such partnerships, and IPRs can play a facilitating role in this direction. However, the public system has little experience in structuring contracts, defining technology access, or charging royalties. Exclusive licensing may invite some criticism from those who believe this contradicts the responsibility of public sector, but allowing access to competitors may not be acceptable to private partners. The public sector should respond to this challenge by considering the market conditions, and there could be situations when some exclusivity could be permitted with restrictions on geographical region and/or time period for commercialisation with an objective of rapid spread of new varieties.

Free exchange of genetic resources has been a major strength of the national and international plant breeding programmes, but after the entry into force of the Convension on Biological Diversity there are concerns about exchange between and even within countries slowing down. The exchange of genetic material under a standard MTA under the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA) will be a significant improvement and there is merit in public-funded programmes adapting this mechanism on the lines of the CG system [Rai and Mauria 2003]. While the treaty came into force on June 29, 2004, after 40 countries ratified it, concerns are expressed about the degree of its success because of sensitivities associated with exchange of germplasm, and the fact that many improvement implementation rules still have to be decided upon. Therefore, it will be interesting to observe how the situation will unfold in this regard in the years to come.

Plant Breeding-Farmer Linkage and Public Seed Production

There are other areas that will be completely untouched by the new IPR regime. For example, there is little scope for IPRs to strengthen the link between public plant breeding, seed production and farmers. The flow of information regarding farmers’ needs and their variety evaluation criteria to public plant breeding is extremely weak. The same is true for promotion of new plant varieties for which farmer-to-farmer spread of seed is common [Tripp and Pal 2001]. The public IPR policy has a limited role to play in addressing this problem. On the contrary, the practice of sharing of varieties in advanced stage of testing through minikits and institute outreach programmes will be discouraged if the protection of a variety is emphasised. Innovative institutional arrangements could prove to be more effective in strengthening breeder-farmer linkage, and cross-sectoral partnerships could be highly useful in scouting, characterisation, conservation and commercialisation of farmer materials and land laces [Gupta 1999]. These materials are considered to be the major sources of novel traits that can be transferred to popular cultivars, and therefore, can also involve private R&D. But this raises the issue of farmers’ rights and co-ownership of varieties, envisaging sharing of benefits arising from commercialisation of these varieties. The sharing of benefits requires an explicit mechanism for collection and transfer of royalties or upfront payments to the Gene Fund proposed under the PVFR Act. Strengthening agricultural R&D and technology transfer could be feasible options for utilisation of the Gene Fund for farmers’ welfare. Public seed production: The growth of private seed industry was accompanied by a sharp decline in the business of the state seed corporations (SSCs). Now almost entire hybrid seed production and quite large proportion of OPV seed (e g, paddy) is with the private sector and SSCs are confined to seed production of less commercially profitable products, including public-bred OPVs. Because of political sensitivities, it is unlikely that there will be a drastic shift in the government policy, granting SSCs full autonomy to manage their business professionally. Therefore, they have to find ways and means to produce and sell seed of those crops and varieties which are unable to attract the private sector. For this, they shall look upon the public breeding programmes for variety development and other technical backstopping. Financial viability of some SSCs may be under threat and the government may need to make a choice between supporting these corporations or providing some incentive to the private sector to augment seed supply of neglected crops. There are many instances where the seed corporations or government may find it convenient to procure seed from private seed companies for distribution in inaccessible areas. This is being practised in Himachal Pradesh for vegetable seed and some field crops like pea. Whatever course is taken by the government, public seed production will likely decline and new IPR regime may accentuate this process.


This paper has argued that the enactment of IPR legislation and development of institutional capacity for their implementation and enforcement are two distinct but essentially connected tasks for realising their impact. Given the performance of the Indian seed industry in the past, it would be rather difficult to predict significant changes in the industry because of the strengthened IPR regime, as macroeconomic, business and R&D policies will continue to determine industry growth in the years to come. The non-IPR mechanisms like biological protection, trade secrets and contracts will remain major instruments of the strategy of private seed companies. The new IPR regime is, however, expected to provide added protection to proprietary material, which in turn, would help stabilise contracting relations in the seed industry and develop the market for innovations and technologies. In some cases like disciplining GE seed markets, the new seed act could be more effective than IPRs. Evidence is not however adequate to assess the potential impact on some other areas which need close monitoring. In particular, one needs to observe how MNCs will behave in terms of their investment priorities and introduction of their elite material in the country. Their behaviour will impact the structure and concentration of the seed industry in a major way, and thereby affect seed prices and access of smallholders to commercial seed. Specifically, there is a need for monitoring the options and choices available to smallholders. This should form the basis for public sector strategy to respond to emerging challenges. Efforts of public plant breeding programmes to generate revenue and control genetic resources may be counterproductive; instead, it should use its IPRs to make the industry competitive and enhance farmers’ access to improved varieties and quality seeds. Finally, farmers have little understanding of rapidly changing commercial seed markets and the new legislation makes the situation even more complex. The government should empower farmers by providing reliable information about their rights, markets, characteristics of crop varieties, etc. Concerted efforts in this direction would go a long way in disciplining seed markets, regulating GE seed and sharpening plant breeding priorities.




[This paper is based on the study commissioned by the Wageningen University (The Netherlands) on behalf of the World Bank. We are grateful to Mangala Rai, director-general, ICAR and secretary, DARE for allowing this collaboration. Thanks are also due to Derek Byerlee and Eija Pehu (World Bank) for their unstinted support, and to other collaborators and respondents for providing invaluable insights. Usual disclaimer applies.]

1 UPOV is still considered to be a weak mechanism in comparison to patents for protection of intellectual property as UPOV allows breeder’s and farmers’ exemptions.

2 For the notified variety, protection is for 15 years from the date of notification of that variety by the central government. 3 The third amendment of the Patent Act was done by an ordinance, which was later ratified by the Parliament.

4 In PVFR Act, farmers’ variety can also be protected as an “extant variety”, which shall include varieties “traditionally cultivated and evolved by farmers”, or a “wild relative, land race, or a variety about which farmers possess common knowledge”. Protection of such varieties is simple as no passport data and fee are required.

5 There is not enough quantitative evidence to assess the potential impact of IPR and therefore we conducted a survey of major seed companies using a semi-structured questionnaire.

6 The physical protection of parental lines has worked reasonably well, though there are instances of leakage, or what the industry describes as “cross purchasing” of material. The Genetic Use Restriction Technologies (GURT), popularly known as “terminator technology” and designed primarily for protection of OPVs, leads to sterile seed when produced without special treatments, prohibiting farmers to save seed for replanting and breeders to use protected material. Use of GURT-based seed is however prohibited under the Indian law.

7 An inevitable consequence of this cross-border movement of improved material, often with a narrow genetic base, will be loss of genetic diversity, especially in field crops.

8 The ITPGRFA entails multilateral access to plant genetic resources for research, breeding and training purposes, and an equitable share in the benefits from commercialisation of products developed using these resources [CGRFA 2001].

9 Recently, Monsanto took over the business of Emergent Genetics and Seminis who had major presence in field and vegetable crops, respectively.

10 The proportion of substandard samples of private seed found was 5.4 per cent, as against 11.4 per cent for public seeds sold in AP in 2001/02 (Commissionerate of Agriculture, AP).

11 Of course, part of this success could be attributed to the fact that until recently China has not had a significant private seed sector, and to policies that impose considerable revenue generation responsibilities on public research institutes.


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