By Harish Penumarthi
Cold Chain Industry equipments are responsible for increasing the shelf life of a particular product. Due to the shift in focus from increasing productivity to providing better storage and transport facility, the Indian Cold Chain Industry has gained importance. The industry has become an important part of the supply chain of products from farm to door. Looking at the rise in infrastructure to curb wastage, the cold chain industry in India is expected to grow at a CAGR of 19 percent from 2017-2022. The cold chain market in India is expected to reach INR 624 billion by the end of 2017. The major revenue contributors in the Indian Cold Chain Industry are cold stores.
To look at it from a broader point of view, the cold chain ecosystem offers a wide array of opportunities. The prime motive of the cold chain industry is to protect the goods from turbulent weather conditions. If the cold chain solutions are applied effectively, they would extend the produce’s life and also keep the product nutrients well intact.
With around 3500 companies operating currently, the industry is quite fragmented and unorganised in nature. The cold chain supply base only comprises 8-10 percent organised players. India has a total of 5,381 cold chain storages with 95 percent storage capacity under private players. Out of these cold chain storages, 36 percent have a capacity of below 1,000 MT. The current capacity allows only 11 percent of the total produce to be stored. These numbers, however, look forward to grow in the coming future. If we were to believe the predictions, cold storage capacity in India is expected to grow at 13 percent per annum on a sustained basis for the next four years with the organised market growing at a faster pace of 20 percent.
The technical standards taken up are quite unsuitable for Indian conditions resulting in failure of achieving optimum performance of standard refrigerating systems. Inadequate labour knowledge and training in handling temperature sensitive products is also a concerning factor including the cost involved. In the west, fuel cost constitutes to 10 percent of operating expenses of cold storage as compared to 30 percent in India.
Cold storages require steady power supply. This is a longstanding problem in India. Frequent power cuts are a major factor of concern in India. These companies have to invest separately in power back-ups which pushes the capital investment requirement.
India is surely a land of opportunities for foreign players looking at the constant, promising growth over the past few years. But, for foreign players to invest in Indian Cold Chain Industry, Indian Government has to act like an effective catalyst. The government started promoting a food safety and security bill recently which would require storage and cold chain facilities in order to reduce food wastage. This surely is a good initiative taken up by the government. The utilisation of cold chain logistics includes both cold storages and refrigerated transportation and is used to increase the shelf life of food produce. With more than 40 percent of agricultural produce being dumped in wastage bins due to lack of proper cold storage facilities, a focused effort on the government’s part is quite critical for new players to enter the league.
A lower cost of funding for setting up cold chain infrastructure facility would be helpful. Having said this, the market participant needs proper awareness about the need and demand of the cold chain facility. A proper and better understanding about efficient refrigeration techniques would play a significant role in promoting the cold chain market in India.
The author is the associate editor of Food Marketing and Technology.