Cold Chain Current Scenario

Indian Cold Chain industry is expected to grow at a CAGR of 28% over the next 4 years and reach a market size of USD 13 Billion in 2017 and is largely unorganized in nature. Thereby, presenting a great opportunity for foreign companies to explore and invest more in this sector.

The sector is growing annually at 28% with total value of cold chain industry in India is expected to reach USD 13 billion by 2017 through increased investments, modernization of existing facilities, and establishment of new ventures. However, it has been observed that the sector is not well organized and operating under below capacity. The Indian cold chain market is highly fragmented with  more than 3,500 companies in the whole value system Organized players contribute only 8%–10% of the cold chain industry market and as on today, most equipment in use is outdated and single commodity based.

There are 5,381 number of total cold chain storages in India with 95% of total storage capacity under private players. It has been observed that 36% of these cold storages in India have capacity below 1,000 MT. It is a fact that 65% of India’s cold chain storage capacity is contributed by the states of Uttar Pradesh and West Bengal with the current capacity only less than 11% of what is produced can be stored.

According to industry estimates, approximately 104 million metric tons of perishable produce is transported between cities each year. About 100 million metric tons moves via Non-reefer mode and only four million metric tons is transported by reefer. Even though, India has about 250 reefer transport operators (mostly small & non integrated firms) that transport perishable products and less than 30,000 refrigerated vehicles currently ply in India. It has been observed that majority of the refrigerated vehicles (80%) are utilized for milk and milk products transportation. It is very clear that the high cost of transportation is a major challenge for refrigerated vehicles market.

West Bengal and Uttar Pradesh have the most number of Cold Stores. North India together has 47 per cent of cold stores whereas; Eastern region occupies 33 per cent of cold stores.

Government Intervention

India is one of the largest producers of agricultural products and one of the global leaders in the pharmaceutical sector. Yet, it is known to have a fledgling cold-chain, which results in supply chain losses of food and other resources. These losses have been stated to be as high as USD 8 to 15 billion per annum from the agriculture sector alone. To address this concern, the government had earlier constituted a National Task Force on Cold-chain in 2008.

The Government of India is one of the driving forces in developing the cold-chain industry and supports private participation through various subsidy schemes and grants. Investment in cold-chain in India was also opened under the automatic route for 100% FDI participation. The existing cold-chain in India largely comprised (in 2010) of comparatively small private companies with a regional or local footprint.

In the previous two decades, India has been developing at a quick pace and an increasing demand for high value foods with a shift towards horticultural crops has been documented. This, coupled with rapid urbanization resulted in multi-fold changes to the spending and consumption pattern of India's population. The existing food supply chain systems were unable to cope with these fast changing demographic trends and the lack of efficient and effective supply chains is understood to lead to a variety of losses in the perishable food segment. In 2012, Indian farmers produced 240 million metric tonnes of horticultural produce, almost equal to its grain and cereals production. Various studies indicate that 18% to 40% of this produce was lost due to supply chain inefficiencies, concluding that a focused effort was required to promote the development of the cold-chain in the country. The Indian government and its Planning Commission spelt out clear intention, that cold-chain has to be supported. Amongst the core identified development areas are the base infrastructure, environmentally friendly technologies, standards and protocols, enabling policies and specialized skills.

 Salient Features of Government Policies

  • 100 per cent FDI through government route
  • Since 2011-12 cold chain has been given infrastructure status
  • Viability gap funding up to 40 per cent of the cost
  • 5% concession on import duty, service tax exemption, excises duty exemption on several items. Subsidy of over 25% to 33.3% on the cold storage project cost.
  • Establishment of National Centre for Cold Chain Development
  • Proposed financial outplay for cold chain infrastructure & food parks of USD 335 Million & USD 650 Million respectively. Over 50%-70% capital grant on projects.

Chief Guest for NCCS 2015
Hon’ble Minister
Smt. Harsimrat Kaur Badal,
Minister for Food
Processing Industries,
Government of India
Indian Chamber of Commerce, New Delhi
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