India offers immense potential for cold chain industry

Deepak Takkar, Senior Vice President & GM Cold Chain, India Emerson Climate Technologies (India) Limited, believes that an active role by the government will help the cold chain sector to grow in the country.

How would you describe the present scenario of the cold chain industry in the country?
The cold chain industry in India is evolving. We believe there is an opportunity for significant growth in the cold chain sector in the future. A lot of investments by corporates, hotel & hospitality and the dairy & food processing industries is taking place. The need to cold-store fresh food and vegetables is still very high. The government of India has a taken a lot of initiatives to drive this over the past three-five years. Recognising the potential for the cold chain business in India, several foreign players providing logistics and technology solutions have expressed interest in setting up cold storage facilities in India in the last couple of years.

Do you think the new government is going in the right direction and taking appropriate measures to help the sector grow and achieve the set targets?
On a positive note, we are moving in the right direction with successive governments playing an active role by initiating several measures such as recognising the cold chain as a sub-sector of infrastructure in the Union Budget 2012-13 and providing subsidies for setting up mega food parks (MFPs). We believe that the new government has created a lot of confidence in investors including cold chain investments. We believe that with right implementation of these initiatives, the cold chain sector will grow.

What is the market potential and the industry size, and how do you see the growth in the future?
India as a country offers immense potential for the cold chain industry to grow. The changing consumption trend from conventional to processed foods is going to drive the growth of the food processing sector further. The market size of the food processing industry is estimated to grow to Rs 13.5 billion by 2014-15. Vision 2015 of the government of India envisages an action plan to double processed foods’ turnover from $98 billion to $210 billion. Recognising the potential for expanding their businesses in India, several foreign players like Cadbury and Danone have started investing in building their cold chain infrastructure to serve the markets. There is a need to improve our road transport infrastructure as well to gain traction for the cold chain industry.

What are the growth drivers for the cold chain industry in the country?
We believe there is an opportunity for significant growth in the cold storage sector in the future. With more and more emphasis on increasing agriculture productivity, it is bound to drive investments in the supply chain infrastructure which can fuel growth in the cold chain. Additionally, the food processing sector has witnessed a growth rate of about 14 per cent in the recent past and is poised to retain high growth in the near future. With rising income levels and growing awareness of hygiene, there is a change in consumption trend from conventional to processed foods. This is expected to drive the growth of the food processing sector further. In the last few years, there has been a marked rise in share of meat & marine product exports. It has offered immense scope for investors to reap rich dividends within the cold chain market in India. With the growing demand for year-round availability of fruits & vegetables, it has helped in developing the cold chain infrastructure to keep agricultural produce fresh throughout the year.

What are the possible solutions that need to be taken to aid the growth of the industry in the country?
Emerson had commissioned a food wastage and cold storage report which cites studies that have pegged the value of fruits, vegetables and grains wastage in India at Rs 440 billion annually. Fruits and vegetables account for the largest portion of that wastage. Without a well-developed cold chain ecosystem, fruits and vegetables will continue to spoil in transit from farm to market. We also need to address the middle of the cold chain, where and how food is stored as it moves from farmer to consumer. We need to understand, however, that controlling the level of wastage mostly depends on various factors like variety of market schemes, usage of proper technology and practices, availability of power supply, availability of real estate for storage and availability of good transport hubs. While the government is seeking to increase investments in infrastructure and improve the food logistics chain, the adoption of proven and efficient technology solutions can help in reducing operating costs and improving quality of produce, thereby helping to alleviate the food wastage problem. The government & private sector, through bodies like NHB and NCCD, are already moving in the right direction with more and more emphasis on developing the cold chain standards in terms of technology & efficiency.

We also believe that the private sector needs to be encouraged to play a more significant role to develop the cold chain space further, including implementing proven cold storage refrigeration technology solutions available today. We have private players like Adani Agrifesh, Bhartifield Fresh, and Healthy Enterprises who have built cold chain infrastructure support for backward integration. More players need to enter the sector. Public Private Partnerships in India are likely to drive the demand in the cold chain sector by providing new opportunities for the private sector. It is also another means to make the cold chain projects more viable.

What are the business opportunities you see for yourself in the industry in coming times?
We consider ourselves as beginners in the India cold chain industry. The last 18-24 months have been a huge learning experience for us. We have also developed customised refrigeration solutions for Indian supermarkets, food-service, and transportation industries that tightly control temperatures and reduce energy usage. The precise control capability helps keep food fresh from harvest to table. This technology helps power the refrigeration system that keeps perishable food and medicine at a safe temperature.

In addition to this, we have come up with our new cold chain centre which will help us in offering more capabilities, in addition to the strong product portfolio, to serve the cold chain market. The new facility offers us the capability to build large capacity refrigeration units that cater to a wide variety of cold stores. We bring in the best technology for cold chain industry in terms of energy efficiency, eco-friendly refrigerants and customised local build products. As our effort to serve the cold chain industry better, we also offer value-added services like Project Design Services and Training Services to educate the various stakeholders in cold chain. We believe the next 3-5 years should be exciting for us in terms of understanding this market and grow our footprint in India.

-Garima Pant