Regulation of Genetically Engineered Crops in India: Implications of Policy Uncertainty for Social Welfare, Competition, and Innovation

Abstract

India is the regional leader in research and development (R&D) in agricultural biotechnology (agri‐biotech) in South Asia. Commercialization of Bacillus thuringiensis (Bt) cotton—the first and only commercial genetically engineered (GE) crop in India—in 2002 was preceded by illegal cultivation and diffusion of unapproved cultivars, raising serious questions of the state's regulatory capacity. Bt eggplant, the first GE food crop to get approval for environmental release in 2009, has not yet been commercialized. An indefinite moratorium on its commercialization was imposed by the Minister of Environment and Forests in 2010. We examine the regulatory framework in India and use the cases of Bt cotton and Bt eggplant regulation to examine the types and sources of nonmarket failures associated with the regulatory policy. We also analyze the demonstrated and likely effects of regulatory uncertainty on social welfare and development of the agri‐biotech industry. We adopt implementation analysis to suggest policy options worth considering to address the nonmarket failures of regulatory policy.