There is a need for an effective and viable cold chain solution that will integrate the supply chain from farm to fork. According to CII, the cold chain industry in India is growing and will treble the size by 2015 as the new government has sanctioned 20 new cold chain projects since May 2014 .
The numbers are staggering but the response is tepid creating a plethora of opportunity for the ones who can pass through the maze of the Indian cold chain market that is projected to register a CAGR of around 23.88 per cent during 2014-19, in revenue terms. This growth will be on account of rising food exports, private investments and favorable initiatives undertaken by the Indian government to boost cold chain infrastructure in the country.
According to Food Processing Minister Harsimrat Kaur Badal, Government will approve 17 food parks across the country over the next few months, attracting investments of about Rs 2,100 crore with each park estimated to attract a minimum investment of about Rs 125 crore. The new government has sanctioned 20 new cold chain projects since May 2014. At a recent 5th national Cold Chain Summit along with CII jointly with Ministry of Food Processing Industries and Ministry of Agriculture (MoA) and National Centre for Cold Chain Development (NCCD), Badal stated the need for an investor to have a food map so that he knows where, what and how to procure and the demand for his purchase.
´Most of the cold chain capacity today is concentrated on three to four states. And out of the entire cold storage capacity, 70 per cent is just for potato. What we need is a scientific approach towards building multi-product cold storage´, Badal added.
According to CII, the cold chain industry in India is growing and will treble the size by 2015. This change is the consequence of rapid changes in consumption patterns of the new and aware consumer and this rise is fuelled by the modern trade, along with the growing food, dairy and pharmaceutical industries in India.
But, India´s greatest need is for an effective and economically viable cold chain solution that will totally integrate the supply chain for all commodities from the production centers to the consumption centers, thereby reducing physical waste and loss of value of perishable commodities.
To fill this gap, NCCD is going to initiate a study along with NABARD to identify the actual gaps in the cold chain infrastructure, not just cold storage. ´All other studies done before were focusing on how much were we producing and how much storage capacity was there. This study will try and find out what is the market demand per capita and work backwards towards various production areas and we make sure that this through port reaches here and what do we need for that,´ said Pawanexh Kohli, CEO and chief advisor, NCCD.
To further push the cold chain sector in India, National Centre for Cold-chain Development (NCCD) and National Bank for Rural Agriculture Development (Nabard) have come out with Nabard Warehousing Fund. For this, the Centre has allocated Rs 5,000 crore to provide loans on low interest rates. Under the scheme anyone who wants to develop or extend the existing cold chain, warehousing, reefer vehicle or pack house infra, will have to pay interest rates of 9.25-9.75 per cent. It will depend on the credit rating of the borrower.
B Thiagarajan, Executive Director & President- AC&R Products Business, Blue Star Limited hailed this as a welcome step and also stressed on the need for stringent implementation of Food Safety regulations.´The most important and critical driver for growth of the cold chain industry is creation of a robust market infrastructure with forward linkages,´ added Thiagarajan. However, there is a growing concern on cold chains viability without government subsidies and viability gap funding.
´Cold chains built around rental model may not be sustainable in the long run. It is discouraging to note that the Industry has not attracted any PE investors and virtually no noticeable start-up´s of any kind due to fragmented farm holdings, lack of Commodity aggregation, diverse markets, viability of a rental model vis-a-vis arbitrage model, low level of value addition and inadequate market levers,´ he further added.
In smaller nations like Malaysia, Philippines and Thailand food processing is 80-90 per cent compared to India, where it´s merely 10-15 per cent. Every year Rs 44,000 crore is lost in the country due to wastage of fruits and vegetables. India produces, 200 mt of products, while the existing cold chain capacity is 30 mt.