Joint Venture Agreement in India
India has an approximate population of 135.26 crore, as of 2018. Of this total population, a significant share of 65.53% lives in the villages, according to a report by the World Bank in 2019. With way more than half the inhabitants of the country living in a rural setup, agricultural entrepreneurship is finally gaining the momentum that is required. One such sector of this society is the seed industry.
What laws exist to protect and nourish the seed industry in India?
Some of the laws in India that exist with the aim of regulating the seed industry include Seeds Act (1966), Seed Rules & Amendments, Seed (Control) Order (1968), Plant Quarantine Order(2003), Protection of Plant Varieties and Farmers Rights Act (2001), National Seed Policy (2002), etc.
These are predominantly national laws applicable in India as a whole which aim to control and protect different aspects of this field such as quality, production, selling of agricultural products and necessities. It is important to note that each state has a separate set of regulations and procedures that assist in complying with the requirements and demands of their state’s land.
Therefore, it is to be kept in mind that the aim of the legislations is double-fold:
In this article, we are concerned with taking a look at the second aim- which is the most relevant for entrepreneurs.
Legal framework on seed production and sale - The Seeds Act, 1966
The Seed Act, 1966, includes a total of twenty-five clauses passed by Parliament, and is applicable to India as a whole. It comprises food crop seeds, edible oil seeds, fruit and vegetable seeds, cotton seeds, and cattle feed seeds.
As provided in the Act, the aim and purpose of the Act is:
“to provide for regulating the quality of certain seeds for sale, and for matters connected therewith.”
The Act provides for the establishment of a Central Seed Laboratory as well as a State Seed Laboratory for the conduct of notified variety-seed analysis. Section 12 and Section 13 of the Act, respectively, provide for the recruitment of two officers under this Act- Seed Analyst and Seed Inspector. The Seed Inspectors powers are enshrined in Section 14 of the same Act.
Credit linked back-ended capital subsidy for seed industry entrepreneurs
Seed Regulations are to be read in sync with the Protection of Plant Varieties and Farmers Rights Act, 2001, where a specific component titled "Assistance for the Boosting of Seed Production in the Private Sector" provides for the subsidy of credit related back-ended capital at a rate of 25% of project costs under the overall limit of Rs. 25 lakhs per unit in the infrastructure developments. All private businesses, individual entrepreneurs, self-help organisations, seed cooperatives and seed industry collaboration firms with the goal of assisting seed development in the private sector are eligible for this subsidy.
Seed Policy, 2002
In India, both the Government and Private Companies produce and sell seeds.
A small extract from the website of Seed Net reveals the following:
“The private sector has started to play a significant role in the seed industry over the last few years. At present, the number of companies engaged in seed production or seed trade is of the order of 400 or 500. However, the main focus of private seed companies has been on the high value low volume seeds.”
The growing importance of the private seed industry has prompted new policy concerns.
The Seed Policy of 2002 is unambiguously direct in its goal of fostering the growth of a private seed industry. The last decade saw the entrance of a significant number of large foreign seed companies into India. It was however also followed by market restructuring by mergers and acquisitions. The arrival of major corporations, supposedly backed by considerable marketing and technical capabilities, has also increased concerns about the survival of smaller seed businesses.
Established legislation does not allow the Seed Inspector or any other jurisdiction to control the prices paid by private-crop producers. Although the Seed Inspector has comprehensive powers under Section 14 of the Seed Act to verify the quality of the seeds, they do not have the power to monitor prices.
Companies set their own rates for their own hybrid crop varieties such as pearl millet, sunflower, cotton, sorghum, and corn. These private hybrids show a large market share for those crops. Commercial businesses have to honour fixed government rates for public-bred varieties.
Hybrid seed production is essentially the unsaid right and prerogative of the private sector. Nearly 70 percent of all improved cultivars bred and sold by private firms until 1993 were hybrids. Since hybrid seeds cannot be multiplied in the fields of farmers, they must be purchased from the company once they are reared. This high rate of replacement of seeds ensures firm sales each time, which is different from conventional seeds. This is not the case with high yielding crop varieties such as wheat or rice, for which the rate of replacement ranges between 9 and 14%. In addition to hybrids, the private sector is also increasingly active in the marketing of low-volume, high-value crops like vegetable seed.
Conclusion
Seeing there is a clear lack of legislation to regulate the prices set by the private sector industries in the sphere of seed production and sale, the hope of seeking a judicial remedy is minimal. Therefore, to remedy the gross loopholes of the present situation, the best possible route would be to approach the Government for suitable regulations.
The Seeds Bill, 2004 which seeks to replace the Seeds Act, 1956, and to provide for regulating the quality of seeds for sale, import and export and to facilitate production and supply of seeds of quality and for matters connected therewith or incidental thereto, has still not been passed. PSCA has recommended setting up a statutory body for fixation of price of seed by incorporating appropriate provisions under Clauses 5, 11, 15, 22 and 25 of the Bill.
Key pointers that entrepreneurs in the Seed Industry must look forward to focus on for maximum utilization of the resources available:
This will work not only towards national interest in food production and protection, but also towards the greater interest of entrepreneurs. Thus, the balanced goals of the forthcoming policies would ensure steady progress in agricultural growth, economic development and improved living standards for humans.
Bibliography
Bharat Ramaswami
https://www.isid.ac.in/~planning/Contemporary%20Trends%20in%20the%20Seed%20Industry.pdf
http://www.prsindia.org/uploads/media/1167468389/1167468389_The_Seeds_Bill_2004.pdf
https://seednet.gov.in/PDFFILES/Tamil%20Nadu%20State%20Seed%20Sub-Committee.pdf
https://ageconsearch.umn.edu/bitstream/178099/2/agec2003v029i003a010.pdf
https://economictimes.indiatimes.com/news/economy/agriculture/how-private-sector-is-helping-cultivators-with-technology-buyback-and-improving-their-social-standards/articleshow/61989717.cms
http://base.d-p-h.info/en/fiches/premierdph/fiche-premierdph-4106.html
https://sci-hub.tw/https://doi.org/10.1108/14626001011068734#