INDIA'S COLD CHAIN INDUSTRY TO DOUBLE IN VALUE BY 2017

While India is the second largest producer of fruits and vegetables in the world, the country's integrated cold chain industry is nascent and is witnessing a wide demand-supply gap. Cold storages at production zones are archaic in nature. The lack of cool rooms and refrigerated transport is causing more than 40% losses in annual produce.     India's integrated cold chain industry - a combination of surface storage and refrigerated transport - has been growing at 18% for the last three years. The industry, currently valued at Rs 245 billion (FY 2013), is expected to reach Rs 520 billion by 2017, growing at a CAGR of 20%.     India has around 5,400 cold storage units, but can only store less than 11% of the country's total produce. While 105mn MT of perishable produce is transported across India annually, only 4mn MT is transported via reefers. To address the gap in demand and supply, the Indian government has introduced multiple initiatives - modernization of existing facilities, new ventures via private and government partnerships, etc.     The private sector accounts for 90% of cold storages in India. In 2017 too, private players will dominate the surface storage segment, which is estimated to reach 95mn MT. Cold chain service providers across the globe and in India have been researching new technologies that will not only decrease their operational costs, but will also give them a competitive advantage over their peers in the industry. One of the focus areas is currently to make reefer trucks more energy efficient to withstand the variations in the ambient temperatures at drop-off points.     ''Cold chain storages in India are still archaic in nature and are only suitable for single commodities like potatoes and apples in comparison to the global industry. But with new initiatives by the Indian government and a steep growth in the consumption of processed foods, cold chain logistics will witness huge growth in the coming years,'' says Shilpa Eguvanti, team lead (Consulting) at ValueNotes.

Source: IRIS (04-DEC-13)

Cold chain market to more than double to $ 8 billion by 2015: Yes Bank

The size of the country's cold chain market is expected to jump more than two-fold to USD 8 billion by 2015 on the back of increased investment in the sector, according to a study conducted by Yes Bank.

"The size of the cold chain market in India is estimated at more than USD 3 billion and is growing at a modest CAGR of 11 per cent. The total value is expected to reach USD 8 billion by 2015 through increased investments, modernisation of existing facilities and establishment of new ventures via public-private-partnership," the report said.

The emergence of organised retail and changes in FDI norms provide immense opportunities for cold chain sector, the bank said in the report released by Planning Commission Member Saumitra Chaudhuri at industry body PHDCCI's conference.

The cold storage capacity in the country currently is about 30 million tonnes, while the annual transaction volume of perishable products is estimated at 230 million tonnes.

Addressing the conference, Chaudhuri said the cold chain market has been somehow lagging behind all the sectors and there is "lot of catching up to do".

Without making a guess on the value of post-harvest crop losses every year due to lack of cold storage facilities, he said there is lot of wastage, which is "disturbing".

"Despite several programmes, investment has been very weak in cold chain sector," Chaudhuri said, adding that except potatoes, there are hardly any facilities in other crops.

Planning Commission member emphasised on the need of cold chain facilities to store horticulture produce, fisheries and pharmaceutical products scientifically.

Chaudhuri said the investment in cold chain investment should start now to achieve perceptible change in the 12th plan period and 13th plan period.

Yes Bank's Country Head Food and Agri-business (Strategic Advisory and Research) noted that high real estate cost and gestation period in the business are the two major challenges in establishing cold chain infrastructure.

Source: The Indian Express Tuesday Nov 27 2012

Excise sops to help expand cold chain network

There is good news for the development of cold chain infrastructure in the country.

To encourage setting up of these facilities, the FM has exempted refrigeration equipment (consisting of compressor, condenser units, evaporator) above 2 tonne refrigeration (TR) utilising power of 50 kw and above from excise duties.

Earlier, the import of such equipment attracted excise duty of 16%.

It is a good sign that the government is getting aware of the need to develop cold chain infrastructure in the country, says Ingersoll Rand chairman Daljit Mirchandaney. Ingersoll Rand is one of the largest cold chain equipment manufacturing companies in the country.

For companies that import cold chain equipment, there will be a significant reduction in the capital cost, said Gateway Distriparks (GDL) deputy CEO R Kumar.

GDL entered the cold chain logistics business in 2007 through its subsidiary Snowman Frozen Foods, a JV with Mitsubishi Group.

The key beneficiaries of this move will be third-party logistics companies that are in the process of setting up cold chain infrastructure.

Says Transport Corporation of India (TCI) managing director Vineet Agarwal, "The exemption from excise duty will have a direct saving on our costs of importing equipment, setting up of cold chain infrastructure and transportation. However, the actual quantum of the benefit can be arrived at only after reading the fineprints of the decision."

Today, cold chain infrastructure is non-existent in the country. Mr Mirchandaney adds, "Transportation of fruit and vegetables through cold chain is almost negligible in India compared with 80-85% in the US or 30-40% in Thailand."

Retailers believe the same. According to Vishal Retail CMD C Agarwal: "The current inefficiencies in the supply chain lead to wastage of fruits and vegetables worth Rs 1 lakh crore annually. Fruits and vegetables are an integral part of organised retail and the recent decision can go a long way in reducing the wastage of fruits and vegetables and thus loss of national resources. The government's move will encourage more players to set up cold chains, which will induce more efficiency in the retail business.

Experts believe that this is a good step to begin with, but then a lot needs to be done for the overall development of cold chain infrastructure.

Reliance Retail president & CEO (operations & strategy) Raghu Pillai says, Indian food habits would take a long time to change and the Indian consumers would still demand fresh fruits and vegetables, but this measure is certainly a step into ensuring that more value addition takes place at the farm level and a move away from consuming commodities.

Mr Mirchandaney though believes that this move covers only one part, that of the cost of capital of setting up a cold chain facility.

Source: Economic Times Ashish K Mishra & Irshad Daftari, TNN Mar 3,