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This note entitled Snapshot:Indian Cold Chain Sector has been prepared by e-Research and Publications India Private Limited
(eRPl) . This snapshot is intended to provide the reader a flavour of the Indian Cold Chain Sector and has been prepared based on
secondary research supported by an analysis at eRPl. Prior to undertaking any business or investment decisions, further detailed
investigations / studies are recommended. eRPI does not accept any direct or indirect legal liability of any kind. This note remains
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Snapshot: Indian Cold Chain Sector

Annual wastage of fruits and vegetables in India is valued around INR 133 billion, as estimated by the
Agriculture and Food Processing Industries Department, Government of India.Despite holding significant
positions in global production of dairy products, fruits & vegetables, food grains and fish, Indias
contribution to world food market is merely around 1%. Ineffective cold chain network is attributed as the
key reason for this low participation in global food market. Lack of appropriate cold storage facilities is
resulting in a huge post-harvest loss every year. Around 35% of the fruits and vegetables produced are
wasted each year which is valued at around INR 500 billion.

Cold Chain implies transport of perishable products from point of
origin to consumption centres with the help of temperature
controlled surface storage and transport system

Though the Indian cold chain sector was initiated in the 1960s, the services were restricted mainly for
potatoes and its seeds. Over the years, there has been a considerable shift from traditional farming to
horticulture, dairy, meat, poultry leading to increased demand for proper storage facilities. As per a study
conducted by National Spot Exchange in 2010, demand for cold storage capacity in the countrystood at
around 61 million tonnes.

Cold chain sector is now recognised as a sunrise sector in India and the Government is encouraging
investments with a view to curb post-harvest losses. The 2011-12 Union Budget accorded infrastructure
status and the sector is now open to private sector participation including100% foreign direct investment.

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Industry Structure
Cold chain sector in India majorly caters to agriculture and its allied sectors. The other noted sector is
pharmaceuticals, especially for vaccines where cold storage service is provided.This snapshot focuses on
cold storage system that caters to agriculture and its allied products.

Indian cold chainsector can be broadly classified as surface storage and refrigerated
Cold chain sector in India is fragmented with the presence of a few large players
o Conventional warehousing facilities are mostlyoffered by family owned companies
o Large players offer more modern facilities
The key public sector authorities that support growth of the cold chain sector include:
o National Horticulture Board (NHB)
o National Horticulture Mission (NHM)
o Horticulture Mission on North East and Himalayan States (HMNEH)
o Agricultural and Processed Food Products Export Development and Authority (APEDA)
o Ministry of Food Processing Industries (MOFPI)
o Department of Animal Husbandry and fisheries (DAHD)
Broadly, there are six types of surface cold storages present in India. They are;

Types of Surface Cold Storages
Types Description
Bulk cold storage Stores single commodity like potato, chillies, apples, etc.
Multi-purpose cold
Stores variety of commodities like fruits, vegetables, spices, milk, pulses,
Small cold storages with
precooling facilities
Storage facilities mainly for export oriented fruits and vegetables
Frozen food stores
Stores commodities like marine, poultry, dairy, meat products and
processed vegetables and fruits. Certain facilities will also have processing
Controlled atmosphere

Specialized cold storage system usually for fruits like apples, pears and
Ripening chambers For bananas and mangoes
Source: Secondary source

Supply Chain - Cold Chain Network Agriculture and Allied Products

Source: Secondary source

Indian Cold Chain Sector Current Status
India lags in cold storage capacities of key produce across agriculture & allied sectorincluding
milk, vegetables and fish
Poultry sector including production of egg and poultry meat also faces shortages in storage

Cold Storage Capacity for Key Agricultural&Allied Sector Produce in India, 2011-12
Approx Production
(million tonnes)
Approx Cold
Storage Capacity
(000 tonnes)
Milk 127 70 80
Vegetable 156 9,000
Fish 8.5 5.5 6.5
Source: APEDA, secondary research

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The overall cold chain sector in India was valued at around INR 165billion in 2011-12, exhibiting a
growth rate of 18% since 2008-09
o Surface storage has a share of around 90-95% in the overall cold chainsector
o Refrigerated transportation in India is still in the emerging phase and accounts for a small
o The cold chain sector is expected grow at a rate of 20-22% in the coming years

Surface cold storage capacity in India stood at around 35 million tonnes in 2011-12. Most of the
surface cold storages are with obsolete technology, making it unviable for anumber of perishable
o Most of the capacity are single product facility which limits capacity utilization
o There is limited number of multi-commodity cold storage facilities

According to an estimate in 2011-12, therewere around 7,400surface cold storage facilities
o Uttar Pradesh, Maharashtra, Gujarat and Punjab together account for around 60% of the total
surface cold storages
o Around 78% of them stack potatoes that have low economic life when compared to other
perishable food products

Surface Cold Storages: Break-up by states, 2011-12
Total Surface Cold Storages: Approx 7,400 nos.

Source: Secondary research

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The Government has spent around INR 5.5 billion on subsidies and tax incentives between 2008
and 2011 in increasing the surface cold storage capacity
o Around 6,300 cold storages have been developed with the assistance of the programmes of
Union Government till 2012

Agriculture & allied sector: Growth in number of Government-backed surface cold storage
facilities, 2004-12

Source: National Horticulture Mission;
# As on 01.09.2012

Government-backed surface cold storages installed capacity witnessed a growth rate of around
5.6% per year from 2004 to 2012

Private participation in cold storage sector has become inevitable with a view to bring in
sustainable efficiency in agricultural sector
o There has been an increase in private players participation in cold chain sector given the
rising demand and incentives given by the Government
o Though the cold storage sector is known for high capital, high operating cost and low return,
the scope for extensive growth is appealing many private players to get into this sector
o Private players are focusing more on products that have high value than the traditional
potatoes and onions

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There were over 30,000 refrigerated vehicles plying in India in 2011, of which more than 80% of
them cater for milk and milk products and 11% for meat
o According to an estimate, around 104 million metric tonnes of perishable products are
transported between cities each year
o Currently, a large share of refrigerated transport is carried out by small, non-integrated firms
with obsolete technology

Refrigerated Transport: Segment-wise refrigerated vehicles, 2011
Total no. of refrigerated vehicles: Approximately 30,000 nos.

Source: Secondary source

Most of the refrigerated trucks in India use expensive blower-system refrigerated vehicles that
require continuous operation of vehicle engines to sustain cooling
o High cost is limiting players to own refrigerated trucks

Cold plate technology is the latest refrigeration technologies used in refrigerated vehicles
o The cold platerefrigeration system for vehicles is electrically driven and less expensive when
compared to other modes
o Many ice cream and frozen food distributors are now opting vehicles that have cold-plate

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Issues and Concerns - Cold Chain Sector
High energy cost energy cost accounts for around 30% of the total expense in running a
surface cold storage facility. Erratic power supply is a major hurdle for this sector
Rising land price as cooling units are not mobile, selecting appropriate location is a key part in
setting up a surface cold storage facility. A good location can cost a good share of total project
Lack of indigenous technology - most of the refrigerated containers and units are imported, which
increases the cost of setting up cold chain facilities. There is dearth of indigenous, innovative
technology developed in all stages of cold chain
Lack of skilled manpower- there is a dearth in manpower in handling cold storage infrastructure
equipped with modern technologies
Problems in refrigerated transportation interstate barriers, taxes, lack of two-way cargo
movement are some factors that hamper refrigerated transport

Key Players
Key players in cold chainservices are Snowman Logistics, (Bangalore, operates in ten metros),
Radhakrishna Foodland Ltd.( Kalamboli, Mumbai), Salva Food and Cold Storage Pvt. Ltd.(Mumbai), Delhi
Cold Storage (Delhi), MJ Logistics Services Ltd., Fresh and Healthy Enterprises.

Some of the leading players in supplying cold chain technology/equipment are;
Ingersoll Rand (USA), Rinac, Walco Engineering, Frick India, Carrier; Bluestar; Lamilux, Dupont,
Emerson Climate Technologies, Parker Hannifin, Schaefer Systems International Pvt. Ltd., Metaflex
Doors India Pvt. Ltd., Alfa Laval (India) Ltd., Tolsma Storage Technology.

Government Initiatives
The Cabinet Committee on Economic Affairs has approved implementation of 75 projects of
integrated cold chain, value addition and preservationof infrastructure in 12
Five Year Plan,
o Of the approved projects, 63 have been sanctioned under 11
Plan by The Ministry of Food
Processing Industries
o The projects entails an investment of around INR 14 billion of which the Governments
contribution will be around 35% and the rest by private parties
According to Vision 2015 by the Ministry of Food Processing Industries, the Government has
planned to set up 30 mega food parks across the country to facilitate the food processing industry

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The Government has set up National Centre for Cold Chain Development (NCCD) as an
autonomous organization in PPP mode with Government and the industry
o NCCD facilitates setting up standards and protocols, involves in human resource
development, and applied research activities

Government incentives accorded to the cold chain sector include:
Infrastructure status to cold chain sector in 2011-12 budget, opening up the sector for viability gap
funding, exemption of excise duty for cold chain equipment
100% FDI through automated route
Investment linked deduction of 150% of capital expenditure incurred for setting up and operating
cold storage facilities
Full exemption of excise duty for specified equipment for surface cold storage and refrigerated
Capital Investment Subsidy for Construction/Expansion/Modernisation of cold storage facilities

Key Drivers and Trends
There has been an increase in cold chain logistics providers in dairy products, frozen fruits and
vegetables, meat, poultry, etc. Specific segments such as demand for atmosphere-controlled storage for
apples have witnessed growth. The key drivers for growth include:
Growing organized retail sector and consumers preference for processed and fresh food
Governments announcement of setting up mega food parks augmenting demand for cold chain
Shift towards horticultural crops due to huge investment and risk involved in food grain cultivation

Future prospects and outlook
An integrated cold chain system covering from production through consumer centres is the key requisite
for the countrys food market at the present time. Some of the points to be noted are;
Appropriate warehousing for perishable items in airports and ports can increase the potential for
Indian commodities in world market
Private players will have a huge scope in providing single-window solution comprising storage,
transportation and distribution under one roof
o With FDI in retail, foreign players who want to establish in Indian retail sector can tie up with
private players for all services from farm gate to consumer end
o Large cold chain players can act as an integrator in bringing farmers, logistic service provider
and retail outlets under one roof to ease the process of delivery of products

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In India most of the cold storages use refrigeration through air conditioner using Freon or
ammonia as refrigerant. Though ammonia compressors are cheap and have high latent heat for
evaporation, it is highly toxic in nature
o Most developed countries use advanced technologies like liquid nitrogen, eutectic plate
technology and CO
environment-friendly technology
o India needs to popularize state-of-art technology in surface cold storage and refrigerated
transportation in the coming years