NEW DELHI (Reuters) - India's Supreme Court ruled on Tuesday that U.S. seed maker Monsanto (NYSE:MON) can claim patents on its genetically modified (GM) cotton seeds in the world's biggest producer of the fiber.
The decision on appeal overturns an earlier ruling by the Delhi High Court that Monsanto - which has been bought by German drug and crop chemical maker Bayer AG (DE:BAYGN) - was unable to claim patents on GM cotton seeds.
The outcome is positive for foreign agricultural companies such as Monsanto, Bayer, Dupont Pioneer and Syngenta which have been concerned that they could lose patents on GM crops in India.
"This is a very good move as most international companies have stopped releasing new technology in the Indian market due to the uncertainty over patent rule," said Ajit Narde, a leader of the Shetkari Sanghatana, a farmers' body, which has been demanding access to new technologies.
Access to advanced technology was important to help Indian farmers to compete with rivals overseas, Narde said.
Mahyco Monsanto Biotech (India) (MMB), a joint venture between Monsanto and India's Maharashtra Hybrid Seeds Co (Mahyco), sells GM cotton seeds under license to more than 40 Indian seed companies, which in turn sell product to retailers.
The Delhi High Court ruling came after local company Nuziveedu Seeds Ltd (NSL) argued that India's Patent Act does not allow Monsanto any patent cover for its genetically modified (GM) cotton seeds.
Monsanto's Indian joint venture had terminated its contract with NSL in 2015 after a royalty payment dispute, escalating tensions over seed technology and drawing in the Indian and U.S. governments.
The Supreme Court on Tuesday also said the Delhi High Court would examine Monsanto's claims that NSL infringed its intellectual property on Bt cotton seeds.
New Delhi in 2003 approved Monsanto's GM cotton seed trait, the only lab-altered crop allowed in India, as well as an upgraded variety in 2006, helping transform the country into the world's top producer and second-largest exporter of the fiber.
Monsanto's GM cotton seed technology dominates 90 percent of India's cotton acreage.