NEW DELHI (Reuters) - Monsanto Co will sell its small branded cotton seed business to local firm Tierra Agrotech Private Ltd, but remains fully committed to India¢s agriculture sector, a Monsanto India spokesman said on Friday.

The sale comes as Monsanto fights a former licensee in India in a bitter dispute that has drawn in both the Indian and U.S. governments, while it is also the subject of a $66 billion takeover by Germany¢s Bayer.

Monsanto, the world¢s biggest seed producer, said its Mahyco Monsanto Biotech (India) (MMB), a joint venture with India¢s Mahyco, will continue to sell genetically modified cotton seeds under license to more than 40 Indian seed companies.

However, its Monsanto Holdings Private unit, an MMB licensee which sells the company¢s Bollgard I and Bollgard II seeds, will exit cotton and sell its branded seed to Tierra Agrotech.

“Given the strategic choices, we have signed an agreement with Tierra Agrotech Private Ltd to pursue the sale of the branded cotton seed business, which will be effective subsequent to the necessary approvals,” Monsanto said in a statement.

Monsanto Holdings had only a small share of India¢s cotton seed market and focuses largely on vegetable seeds such as beans, broccoli, cabbage, and cauliflower, the spokesman said.

He declined to comment on the sale price.

Tierra Agrotech officials were not immediately available for comment.

Cotton output has jumped fourfold since India allowed MMB¢s genetically modified variety in 2002, transforming the country into the world¢s top producer and second-largest exporter of the fiber. MMB¢s lab-grown seeds yield nearly all of the cotton produced in India.