The Government of India (GoI) will soon level the playing field for seeds farming in particular, and agricultural research in general, by effectively removing the single largest barrier to the entry of MNCs into India.

Foreign investment in plantation activity is currently forbidden in India. Four months ago however, Hybrid Rice International, a 61% foreign owned company, complained to GoI's Foreign Investment Promotion Board (FIPB) that the regulation requiring it to contract out seed farming and growing to local farmers was adversely affecting its business in India.

In response to this, the GoI has decided that growing hybrid seeds is not farming or plantation activity but akin to manufacturing activity, for which any company, including an MNC, may buy or lease land. In order to do this, agricultural research and the growing and processing of high yielding hybrid seeds will be removed from the definition of agriculture.

State govt. could throw a spanner in the mechanism

State governments still wield a stranglehold over "Non Agricultural Land," however. In all Indian states, land must be 'passed' as non-agricultural, and as a result become costlier than its agricultural equivalent by between 10% and 300%. Thus companies often have to fork out prohibitive costs for land.

Intent is not achievement. GoI might face farmer pressure forcing it to back down, and while the ministry of science and technology, and the FIPB may be expected to back the move, the agriculture ministry is likely to oppose.

By Navroz Havewala