India has seen a massive growth in horticulture produce, dairy and meat over the past decade. India occupies a position amongst the top three in production of commodities like spices, fisheries, poultry, milk, fruits and vegetables, being the second largest producer of fruits and vegetables in the world with production of 81.3 million metric tonnes and 162.2 million metric tonnes respectively, but its share in global export of fruits and vegetables is around 1.4% only.
The cold chain industry in India is still at the beginning stage, and despite large scale production of perishable foods, the cold chain logistic resources remain untapped. More than 50% of the cold storage facilities in India are currently concentrated in Uttar Pradesh and West Bengal, while other states still face a challenge with investments from the government and private operators. However, the market is gradually getting organised and focus on multi-purpose cold storages is rising.
India has a total of around 6,300 cold storages with a capacity of 30.11 million metric tonnes. According to report by the US Department of Agriculture, the Indian food market is set to almost double by 2025, to reach $344 billion at a CAGR (Compound Annual Growth Rate) of over four per cent.
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 government also provided for 5% concession on import duty, service tax exemption, excise duty exemption on several items and a subsidy of over 25% to 33.3% on cold storage product cost.
The main road blocks to growth of cold chain logistics is the high energy consumption cost, the energy consumption alone amounts to 30% of the total expenses of cold storage in India compared to 10% in the west. Uneven distribution of capacity of the existing cold storages where only single commodities can be stored are a major issue.
For private players the high level of initial capital required to construct a cold chain unit continues to be the biggest challenge. But if the government pitches in with a clear plan and promotes more PPP (Public-private Partnership) initiatives in this field, we could see a momentum growth in the cold chain industry in India.
Published on: September 18, 2017