Price controls and biotechnology innovation: are state government policies reducing research and innovation by the ag biotech industry in India?

Abstract

In 2006, the governments of major cotton-producing states in India ordered all seed companies to lower their prices of Bt cotton seed to Rs. 750 per packet of seed, down from Rs. 1,600 per packet. Although biotech firms challenged these price controls at the Supreme-Court level, the controls are still in effect. It is obvious that farmers will benefit from these price reductions in the short run. An important question for farmers and policy makers, however, is whether these price controls are having a chilling effect on biotech research and innovation in India, which could harm farmers in the long run.