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Indian cold chain industry expected to grow at 10-15 per cent annually
Monday, 30 December, 2013, 08 : 00 AM [IST]
Priyanka Dhomse, Mumbai
The Indian cold chain sector, which is currently grappling with issues concerning the quality of food products, food safety, maintenance of proper storage conditions, etc., has realised the necessity of faster development, and could grow at the rate of 10-15 per cent per annum in the next 5-10 years, according to Arvind Surange, chief consultant and proprietor, ACR Project Consultants Pvt Ltd.

“It should be specifically mentioned that a large number of cold storage projects, located in different parts of the country, are based on old and inefficient technology. The user industry would expect modern plants with more automation, mechanised operations and more hygienic operating conditions at the cold chain units,” he added.
India, being the world’s largest producer of fruit and the second-largest producer of vegetables, requires a better cold chain system to preserve the quality for a longer period. Fruit and vegetables, being perishable goods, need to be stored properly before distributing to the wholesale market. Hence, there is a greater need for multi-commodity cold storages in every district in the country.
According to experts, the shortcomings of the cold chain system leads to post-production losses. “India is also the largest producer of milk, with 105 million tonne per year. It produces 6.5 million tonne meat and poultry and 6.1 million tonne fish. However, the extent of processing is low,” said Vikas Upadhyay, assistant director, product management and marketing (cold rooms), Carrier India.

“Cold chain has been a major driving force in the entire perishable food sector. This is due to the fact that India is a major producer of perishable foods. The overall perishable food production in India is over 350 million tonne,” Surange said.

He added that the current food processing capacity is less than six per cent of the production, and the cold storage capacity is about eight per cent of the production. “This shows that there is a great potential for growth,” he said.
Challenges and opportunities
As far as challenges are concerned, awareness must be created and training must be imparted to the producers, traders, processors and exporters. “The co-ordination and understanding between them is necessary to establish the cold supply chain, which creates a win-win situation to all the stakeholders of the supply chain,” said R Sivakumar, senior manager, cold chain projects, Voltas Ltd.

“The Indian cold chain industry is still in a nascent stage, with a large number of small and unorganised players. However, we are witnessing a clear shift towards usage of better technology, equipment and operating processes. The government has put a high focus on developing the cold chain in India,” Upadhyay said.

“The National Centre for Cold Chain Development (NCCD) has been appointed to help cold chain development, formulate standards and review subsidy schemes. The challenges faced by the cold chain industry include tedious formalities in land acquisition, weak infrastructure in terms of roads and access, power shortages, high energy costs, and non-uniform consumption points in the urbanising environment,” he added.

Over the last few years, organised retail and food service industries have emerged as new segments of cold chain, mainly due to the changing consumption pattern.
In addition to the existing meat, poultry, ice cream and dairy segments, we see quick service restaurant (QSR) chains, food processing and pharmaceuticals as potential segments.

According to Upadhyay, “The entry of multinational retailers such as Wal-Mart, Tesco, Carrefour and Metro would help in bringing modern standards and protocols in food processing, handling and retail in India, and would certainly lead to the emergence of cold chains.”

Surange, however, opined that the challenges faced by the industry were high initial cost of cold chain projects; rising costs of land, construction and plant and machinery; rising cost of energy; unreliable energy supply in most states; availability of water with proper quality; the lack of proper road infrastructure; the lack of adequate refrigerated transport facilities, and the lack of availability of trained personnel.”
Wastage of food items
Though India has made tremendous progress in terms of creating awareness about the usage of the cold chain, it remains behind when compared with major horticulture producers of the world in terms of the storage space available per metric tonne fruit and vegetables produced.

“According to market studies, approximately 30 per cent of India’s produce is wasted due to inefficient methods of storage, handling and transportation. Approximately 104 million metric tonne perishable products are moved in the country per year,” Upadhyay said.

“Out of that, around 100 million tonne is shipped via non-refrigerated mode, and the remainder is shipped by refrigerated transport. There are roughly between 7,000 and 8,000 reefer trucks in India, as per industry estimates, compared to an estimated requirement of 20,000 to 25,000 refrigerated trucks (as per NCCD),” he added.

“High growth prospects for the food processing sector and government incentives present huge opportunities for the refrigerated transportation sector in India. The Indian food industry is poised for significant growth in the near future,” Upadhyay said.
“As per government estimates, it was more than Rs 1 lakh crore due to commercial value degradation in the supply chain from production to consumption. To promote the investments, the government has initiated subsidy schemes, public-private partnership (PPP) models to set up post-harvest infrastructure in the country,” Sivakumar said.
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.
“Besides to boost the investments, financial institutions should play a major role to encourage the investors on guidance on detailed project report (DPR) preparation and evaluation, term loan sanctioning, nominal interest rates and disbursement. The growth cannot happen without their support. The state government should encourage them by subsiding the electrical tariffs, encouraging use of renewable energies, etc. Food availability and affordability is for everybody,” Sivakumar said.
While giving information on the initiatives undertaken by the government, Upadhayay said,  “Setting up the NCCD, which would help establish standards, subsidy reviews and monitor overall cold chain development in India. The cost of setting up solar power must be reduced to overcome the power shortage.”

Giving more details, he added that the Confederation of Indian Industry (CII), in association with the ministries of agriculture and food processing industries, set up a National Task Force in 2008 to stimulate cold chain infrastructure development.    

?    This task-force is working to draft cold chain storage and transport protocols and standards and also to develop and run horticulture-based pilot cold chain projects in several states;

?    The task-force, in association with the government of India, is setting up a National Centre for Cold Chain Development. The centre will recommend standards and protocols for cold chain infrastructure development and suggest mechanisms for benchmarking and certification of infrastructure, processes and services provided by the cold chain industry, and

?    The government of India offers subsidies for investment in cold chain and a special duty structure for import of related equipment
“The issue of lack of availability of trained manpower still needs to be taken care of. Agencies like NHB and the Indian Society of Heating, Refrigerating and Air-conditioning Engineers (ISHRAE)  have initiated some programmes in this direction. The formation of NCCD is expected to take concrete actions in this respect,” Surange said.

“The government offers excise concessions for parts of plant and machinery for cold projects, However, in order to promote efficient technology, they should also give excise concessions for items like insulated panels, doors, electrical equipment employed on the cold storage projects.” he added.
Innovations and trends
As far as innovations are concerned, energy-efficient solutions are being used by the industry players. “Energy-efficient systems and the use of renewable energy resources in cold chain systems are happening worldwide mainly to reduce the operating cost, which is the biggest challenge,” Sivakumar said.
“Due to high power costs, energy-efficient solutions are preferred for refrigeration products. PUF panels and pre-fabricated structures are preferred over conventional construction for cold storage. There is high awareness of Hazard Analysis and Critical Control Points (HACCP) approaches. Hygiene, safety and proper maintenance form important parts of the cold chain industry,” Upadhyay said.

“The technology of construction has undergone a phenomenal change from conventional brick-wall construction to sandwich insulated panel and reinforced concrete (RCC) structures to pre-engineered buildings (PEB) steel structures. Energy-efficient practices like energy recovery systems, energy-efficient designs of refrigeration equipment and automation are some of the innovative features. Efforts are being made to introduce the concept of green technology, as also the use of renewable energy for the cold chain sector,” Surange said.

Impact on growth of the cold chain

Upadhyay feels that there are certain points which impacts the growth of cold chain, such as the high cost of setting up and operating cold storages, unpredictability and seasonality of produce available for reefer transportation, erratic and irregular electric power supply, necessitating the setting up of a captive in-house power generation infrastructure, which adds to the high cost of setting up such installations, absence of a unified tax code at the state level, which leads to delays and hold-ups at state borders leading to inefficiencies in transport and distribution, standards for storage and transportation of perishables in refrigerated condition.  

“The modern cold storage companies certainly use radio frequency identification (RFID) and global positioning system (GPS) technology to obtain data logger results on the central monitoring module. This is especially used in the pharmaceutical industry and is also being encouraged in the food industry,” Upadhyay added.

The cold room is an essential part of the food industry for preserving the quality and freshness of produce. Growth in the food service and food processing industries will certainly propel the growth of the cold storage industry.
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