The standoff between the Indian government and Monsanto Co. saw further escalation Thursday with the company withdrawing its application seeking approval for the introduction of the next generation of genetically modified cotton seeds in the country.

India is Monsanto’s biggest market outside the Americas, but the government’s proposal that would force the world’s biggest seed maker to share its technology with local seed companies has been unacceptable for the conglomerate.

“Our decision to suspend this introduction in India is an outcome of the uncertainty in the business and regulatory environment, which includes the regulation of trait fees and introduction of the draft compulsory licensing guidelines,” Monsanto’s spokesperson said in a statement, Press Trust of India reported

In a letter dated July 5, Monsanto’s local partner in the country, Maharashtra Hybrid Seeds Co Ltd (Mahyco) wrote about the proposal for the sharing of technology, pushed for in May. Following protests by global seed companies, the order was withdrawn temporarily while the government sought feedback from stakeholders, which it is now evaluating, Reuters reported.

monsanto india A projection against genetically modified food is seen on the landmark India Gate monument during a Greenpeace protest against US-based agricultural biotechnology corporation Monsanto in New Delhi, Aug. 9, 2011. Photo: Getty Images/SAJJAD HUSSAIN/AFP

In the letter, the company said the proposals “alarmed us and raised serious concerns about the protection of intellectual property rights.”

The regulatory agency Genetic Engineering Appraisal Committee (GEAC) was also asked by Mahyco to return the material submitted by the company as a part of the application, which, Reuters reported, a government official said had been done.

Genetically modified cotton cultivation was first allowed in India in 2002 with Monsanto’s single gene Bollgard I technology. In 2006, the government approved the double gene Bollgard II in 2006, which Monsanto says helped transform India into the world’s second-largest exporter of cotton.

The latest technology of the Bollgard II Roundup Ready Flex would have reportedly increased the yield of the crop at a time when the existing variety was losing some of its effectiveness. However, the decision to pull the application could adversely affect Monsanto’s efforts to introduce the new seed for years, leading to massive losses.

The move comes as a blow for Prime Minister Narendra Modi’s attempts to make India a lucrative destination for foreign investments with initiatives like the “Make In India” campaign.

However, Monsanto maintained that the company is committed to Indian agriculture will continue to introduce more products in the Indian markets. 

“We plan to continue bringing innovative research in our businesses in corn seeds, vegetable seeds and crop protection chemistries, enabling farmers by providing high quality seeds and solutions as they make their planting decisions,” the company said. 

A spokesman for the environment ministry that has the application was not available for comment, according to Reuters. Monsanto India’s shares fell by 2.78 percent at the Bombay Stock Exchange as markets closed Thursday.