Monsanto Co has withdrawn an application seeking approval for its next generation of genetically modified cotton seeds in India, a major escalation in a long-running dispute between New Delhi and the world's biggest seed maker.

A letter sent by Monsanto's local partner in India, the conglomerate's biggest market outside the Americas, strongly objects to a government proposal that would force Monsanto to share its technology with local seed companies.

The company is also at loggerheads with India over how much it can charge for its genetically modified cotton seeds, costing it tens of millions of dollars in lost revenue every year.

The unprecedented decision to pull the application, which has not previously been reported, could set back Monsanto's efforts to introduce its new seed, called Bollgard II Roundup Ready Flex technology, for years and lead to further losses.

It will also ratchet up pressure on the Indian government, as it undermines Prime Minister Narendra Modi's efforts to make the country look more attractive to foreign investors.

It could also hurt Indian cotton farmers. The new seed variety helps fight against weeds that sap the cotton crop of vital nutrients and depress yields.

A Monsanto spokesman said the withdrawal of the application was "an outcome of the uncertainty in the business and regulatory environment", but that the move had "no impact on our current cotton portfolio being sold in India".

A spokesman for the environment ministry, which had the application before it, was not available for comment.

In a letter, dated July 5, Maharashtra Hybrid Seeds Co Ltd (Mahyco), Monsanto's technology partner in India, singled out a government proposal, mooted in May, that would require Monsanto to share its proprietary technology.