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Introduction 01

Facts 02

Highlights of the Cold Chain Sector 03

Evolution of the Cold Chain in India 04

Present Scenario 05

Growth Drivers 08

India throughout the years saw a stamped increment in production of perishable high

nutrition items like organic products, vegetables, meat and poultry items and so forth yet

improvement of cold chain foundation was not deliberately coordinated, for safe taking care

of and to pass on these perishable items to business sectors, aside from in the dairy area. A

resultant demand supply bungle developed over these rural items, oftentimes adding to

broad value changes and expansion.

The deficiency of scientific farm-to-market coordinations, likewise added to high misfortunes

in the event of perishable foods, advance adding to inflationary pressures. These inflationary

patterns are assessed to be for the most part because of ineffective post-harvest logistics on

domestic front, which was unable to cope with increased demand and the associated

increase in production.

Cold chains are fundamental for developing the timeframe of realistic usability, time of

showcasing, staying away from over limit, diminishing transport bottlenecks amid pinnacle

time of generation and to keep up the nature of deliver. The advancement of cold chain

industry has a vital part to play in diminishing the wastages of the perishable items and

therefore giving gainful costs to the producers. Additionally, it acts like a spine for

pharmaceutical industry and keeps up the viability of the medication all through the

inventory network by giving temperature controlled environment to delicate pharmaceutical

items.

According to the World Bank’s 2014 Logistics Performance Indicator, India is ranked 54th and

is behind countries such as Japan, the United States, Germany and China. Logistics costs

account for around 6-10 percent of average retail prices in India as against the global

average of 4-5 percent. Therefore, there is a clear scope to improve margins by 3-5 percent

by improving the efficiency of the supply chain and logistics processes. Developing an

integrated supply chain, including cold chain can save up to Rs300 billion annually and at the

same time reduce the wastage of perishable horticulture produce. It is worth noting that the

price of vegetables, fruits, milks and eggs, meat and fish have been rising faster in spite of

the fact that India is the second highest producer of fruits and vegetables. This is led by

inadequate supply chain and logistics infrastructure and management in the country.

A recent report released by ASSOCHAM claims the Indian cold chain industry, which stood at

Rs. 10,200 crore in 2009, is expected to register a compound annual growth rate of 25.8% to

reach Rs. 64,000 crore by 2017. The report also states the country’s cold storage capacity is

unevenly distributed and that the country has cold chain capacity available for only 9 million

tonnes vegetables, leading to huge wastage.

Currently, India has more than 6,900 cold storage facilities unevenly spread across the

country, with an installed capacity of 32 million metric tonnes.

• India’s cold chain sector was estimated at INR 175-177 billion (~USD 2.9 billion) during

2013-14

• 88-90% of market share is with the Temperature Controlled Warehouses (INR 162 billion

(USD 2.7 billion); 6500+ stores, 30.4 million MT Capacity)

• Remaining 10-12% comprises of Temperature Controlled Vehicles (INR 13-14billion (~USD

0.2 billion); 8000+ vehicles).

• It is highly fragmented industry and unorganized sector accounts for an estimated 80-85%

share of the total capacity.

• Wholesalers and organized retailers are the key user segments of cold chain services with

a share of 70-75% and 10-15% respectively.

• Currently, about 68% of the total cold storage capacity is concentrated in the states of

West Bengal, Uttar Pradesh and Bihar, wherein storage of potatoes accounts for 85-90%

of the capacity.

• Potatoes accounted for 68% of total volumes handled followed by multipurpose storage

which accounted for 30%. In value terms, multipurpose stores have the largest share of

77% while the share of potatoes was a mere 17%.

• Approximately 36% these cold storages in India have capacity below 1,000 MT

• The Horticulture and Non-Horticulture produce of India stands at more than 500 MMT.

The total cold storage capacity in India is 32 MMT, which is not even 10 per cent of India’s

perishable produce.

• Only 10–11 per cent of the fruits and vegetables produced use cold storage in India.

There is a deficit of nearly 90 per cent.

The cold chain in India is generally imagined as setting up of cold storage unit. NCCD has

characterized cold chain as a situation controlled inventory network, comprising of capacity

and conveyance exercises which keep up an item in stipulated surrounding scope of

conditions. It includes a progression of exercises and methods that perishable goods are

liable to, from source of raw material to a production facility or to an end consumer. Cold

chain is not simply refrigerated capacity and transport but rather as a storage network, it

must include a point of origin – a production unit such as horticultural pack-house, an ice

cream factory, and an abattoir or vaccine manufacturing facility.

There has been a spurt development in foundation of cold storage in India.

The capacity grew at much faster rate than the number of units indicating establishment of

bigger units after 1998. As on 31 March 2014, there were 6891 cold storage units created

with a total storage size of 31.82 million tonnes.

The base line survey of cold stores, conducted for National Horticulture Board under DAC in

2013-14, indicates the segment wise share in number of cold storage.

0

5000

10000

15000

20000

25000

30000

35000

1955 1960 1965 1970 1975 1979 1986 2004 2007 2009 2010 2011 2012 2014

No. of Cold Storages Capacity '000 MT

Source: NCCD

As per the Survey, 1219 cold stores are permanently closed/not available and the total

number of functional cold stores is 5367 amounting to a total storage size of 26.85 million

tons. The survey also indicates that although most of the cold storages facilitate

transportation of commodities, 79% don’t own any transportation facility and there are very

few modern pack-houses to originate produce into cold-chain.

India has seen an extraordinary development in production of agriculture goods, dairy and

meat items throughout the most recent decade. Quickly, India involves a position among the

main three production of a large group of wares including spices, fisheries, poultry, milk,

fruits and vegetables. But even with such large production volumes, India’s present share in

global farm trade is still very small. India positions first in milk generation on the planet with

a milk creation of 138 million MT, India is the second biggest producer of vegetables on the

planet with creation of roughly 280 million MT however its partake in worldwide fare of

products of the soil is around 1.4% as it were. Around 4.58 to 15.88% of products of the soil

get squandered in the nation. This is mostly brought on because of absence of cold chain

framework which incorporates both capacity and transportation offices.

83%

9%7%

1%

Horticulture / Agri Based Products Processed Food Based Products

Animal Husbandry Products Pharmaceutical Based Products

There is a whole other world to cold chain than simply keeping them 'Cool', it incorporates

every one of the exercises, for example, transportation, taking care of, capacity, warehousing

and at last retail at the rack. Other than temperature there are a great deal of variables like

Framework, bundling, control of air, stickiness, individuals and item stream that contribute

towards keeping up the cold chain.

Cold chain is about the "cold" as well as it alludes to every single logical strategy connected, to

keep up different parameters of completed create amid the pre-molding, taking care of,

transport, stockpiling and retail of items. The cool chain incorporates differed parts of bundling,

air gasses, science, damage, dampness, traceability, framework, individuals and item stream,

other than temperature. Actually, temperature control can just work with all others in sync.

The Central Institute of Post-Harvest Engineering and Technology (CIPHET ),Ludhiana has

evaluated the yearly estimation of gather and post-reap losses of major rural produces at

national level to be of the request of Rs. 92,651 Crore ascertained utilizing generation

information of 2012-13 at 2014 wholesale prices.

The break-up of commodity wise losses is as follows:

LOSSES

Commodity / Crop

Transportation (%)

Operations(%)

Storage(%)

Overall TotalLoss(%)

Monetary value of the

loss(in Rs. Crore)

Milk 0.02 0.69 0.21 0.92 4409

Meat 0 1.99 0.72 2.71 1235

Marine Fish 0.91 8.7 0.91 10.52 4315

Inland Fish 0.17 4.01 1.05 5.23 3766

Egg 0.36 4.52 2.31 7.19 1320

Poultry Meat 0.66 2.08 4 6.74 3942

Cereals 4.65 – 5.99 20698

Pulses 6.36 – 8.41 3877

Oilseeds 3.08 – 9.96 8278

Fruits & Vegetables

4.58 – 15.88 40811

Source: PIB-GoI, MoFPI.

The cold chain industry in India is in its infancy and despite large scale of production of

perishables, the cold chain potential remains untapped due to reasons such as fragmented

market, single commodity cold storage, lack of adequate infrastructure such as roads and

power, low awareness about handling perishable produce and high initial investment.

However, increasing urbanization and growth of organized retail, food servicing and food

processing sector are boosting the growth of cold chain industry in India. The trend is

shifting towards establishing multipurpose cold storages and providing end to end services

to control parameters throughout the value chain

SEGMENTATION ACCORDING TO PRODUCT CATEGORY

The above listed product segments, have varied holding times, depending on time-

temperature combinations & cold-chain infrastructure facilities.

The first 3 in the list mostly have a short holding life and the last 3 have a long holding life of

many months or even years. Accordingly, the cold-chain facilities play a differentiated role

which may be summarized as under:

• For fresh horticulture & floriculture produce, the cold-chain enhances the life cycle of the

produce thereby extending its saleable life & time span to reach the end-consumers

across geographies. Due to shortage of time, quick logistics connectivity is the driving

force.

• For transformed or processed food, the cold-chain protects the status of the

manufactured goods till it is consumed. Due to long term holding ability, low cost

procurement and a managed product inventory takes precedence.

In both cases, the benefit of using a cold storage facility goes to the owners of the produce

which are namely; the farmers, Farmer producer organization (FPOs), as well as the traders

and food processors.

Growth in Organized Retail:

Over the last few years, organized retail and food service industries have emerged as new

segments of cold chain, mainly due to the changing consumption pattern. With the entry of

big corporate into retailing, the supply chain including cold chain for food and beverages

distribution is expected to get streamlined. India would be in need of over 33 million tonnes

of cold storage capacity to be added in the next four years, with investment requirement of

about INR 3,000 crore per annum. Since there is an increasing demand for a variety of fruits,

vegetables and grains it is natural that there would be additional requirement of cold

storage facility to be setup.

Growth in End user segments (food processing, horticulture):

As of 2013, India ranks 5th in the world in terms of the value of food processing. The

industry is expected to grow to INR. 126,840 crore by 2016, growing at 13 percent each year

since 2012. The industry is critical from the economic point of view and hence the

government has its focus on the development of this industry. With the growth in this end

user segment, cold chain infrastructure is expected to get a boost and help in reducing the

wastage.

Government Initiatives: The government is taking steps for the sector, such as schemes for

capital investment subsidy from the National Horticulture Board (NHB), the National

Horticulture Mission (NHM) and the Ministry of Food Processing Industries (MoFPI) for the

agri-investors to set up cold chain infrastructure. Government has as well set up National

Centre for Cold Chain Development (NCCD) which would help in establishing building

standards through international benchmarking and to promote research and development

activity in the cold chain sector.

Rising demand from the Pharmaceutical sector:

India is among the top five emerging pharmaceutical markets and has grown at an estimated

compound annual growth rate (CAGR) of 18.36 % during the period FY 2015–2020, the

Indian pharmaceutical market is poised to grow to INR 3630billion by 2020 from the 2015

levels of INR 1320 billion. The ever-growing pharmaceutical industry is acutely temperature

and time sensitive. Cold supply chain acts like a backbone for pharmaceutical industry. It is a

big responsibility to have a regulatory supervision and to maintain the efficacy of the drug

throughout the supply chain in order to maintain the quality of drugs and comply with

statutory requirements.

Critical Observations

• Cold Storage at the production level is a missing link along with absence of reefer trucks.

It is estimated that the actual requirement for both is more than what is stated by

sources.

• Transportation is of no avail without relevant source and receiving points. At source, there

is a shortfall of modern pack-houses. Pack-houses function as decision making centres for

the purpose of directing flow of produce to relevant consumption points.

• Perishable fruits and vegetables have a limited life span in normal conditions. However,

unless the selling cycle will fall within the natural span mitigating food losses will become

a challenge.

• Current movement of perishable produce can bypass cold-chain intervention but it results

in lowered access to markets and unnecessary food wastage.

• Current consumption of frozen and processed goods is met by using the existing cold-

chain as it cannot bypass this intervention. The use of cold storage is critical for such

products.

• Current consumption demands greater focus on establishing end-to-end delivery systems

to connect farm-gate value directly with consumption points.

• Infrastructure creation needs to consider demand in order to avoid unnecessary capacity

overruns.

To use cold storage as stepping stones to markets, it requires a matching development of

back-end infrastructure in form of modern pack-houses with refrigerated transport attached.

In case of frozen foods, to suit demand based flow, a greater capacity in form of modern

retail shelves at merchandising end is recommended in the form of Micro-cold storages at

retailer levels.

In case of perishable produce, it is recommended that alongside modern pack-houses

designed for cold-chain, an appropriate number of food processing units must be created.

This will lead to greater value creation and higher output from rural India. Holistic

development is the key to integrating the supply chain, to improve the existing domestic

supply of food items, to include the complete basket of perishable foods in cold-chain, to

mitigate food losses, to improve direct market connectivity for producers and for greater

inclusive wealth creation in the country.

.

The cold chain industry is an emerging and fast growing business sector in India. Considering

the current levels of fruits and vegetables wastage along with focus on food safety and

security, cold chain facilities will play an important role in meeting the demand of food in the

country. Development in the food processing sector and organized retail, government

initiatives, increasing investments as well as increasing willingness on the part of consumers

to pay a premium for higher quality of food products, will drive overall growth for the

industry. However, interventions are required to bring down operating costs, to improve

quality of end produce, for adoption of new technology solutions and training of manpower.

Citations

• Press Information Bureau Government of India Ministry of ... (n.d.). Retrieved October 31, 2016,

from http://www.cicr.org.in/pdf/press/11-12-2015.pdf

• All India Cold-chain Infrastructure Capacity (Assessment ... (n.d.). Retrieved October 31, 2016,

from http://www.nccd.gov.in/PDF/CCSG_Final Report_Web.pdf