Role of Biotechnology in Stimulating Agribusiness R&D Investment in India

Abstract

Biotechnology influenced Indian R&D through three channels: Bt cotton seed sales increased seed companies' income, providing them with money to invest in R&D and increasing their expectation for future profits from R&D; biosafety regulations increased biotech and seed firms' ability to capture some of the economic benefits from research by granting them a monopoly on GM traits and providing regulators to police the monopoly; finally, biotechnology improved technological opportunities with new traits and research tools. We tested the importance of these channels using an econometric model of R&D expenditure by the Indian seed industry with a unique set of individual firm data from 1987 to 2009.