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Cold storage regulatory scenario in India
Saturday, 29 May, 2021, 08 : 00 AM [IST]
Karan Chechi
Cold storage facility is a commercial facility that stores perishable goods such as fruits, vegetables, meat and fish, for longer periods of time under regulated conditions. Government institutions such as the National Horticulture Board (NHB), National Horticulture Mission (NHM), The Agricultural and Processed Food Products Export Development Authority (APEDA), Ministry of Food Processing Industries (MoFPI), Ministry of Integrated Development of Horticulture (MIDH) and Department of Agriculture and Co-operation currently operate in the cold storage sector of India.  

The National Horticulture Board, which is part of the India’s Department of Agriculture, Cooperation, and Farmers Welfare, is offering a credit-linked back-ended subsidy of 35% of the capital cost of the project in general areas and 50% in North East, hilly states, and scheduled areas for cold storage capacity greater than 5 TMT and up to 10 TMT for cold storage construction/expansion/modernisation under the Scheme for Capital Investment Subsidy for Construction/ Expansion/ Modernisation of Cold Storages and Storages for Horticulture Products.

The Ministry of Agriculture and Farmers Welfare authority came up with the Mission for Integrated Development of Horticulture (MIDH) scheme which stated certain guidelines for the cold storage units.

It includes two types of cold storages: Type 1 and Type 2. The Type 1 cold storage units are equipped with chamber sizes >250 MT (metric ton), each chamber with a single temperature control, and designed for single product storage. These types of storage are intended for long-term bulk storage (potato, spices). This storage facility has a system for handling unpackaged and soft packed produce, as well as produce stored in bags or bins. The Type 2 cold storage units is designed with the chamber size of <250 MT (metric ton), with more than 6 chambers, capable of multiple temperature control so as to suit multiple product storage.

These types of storages are intended for short-term storage and serve as distribution hubs for packaged and ready-to-retail produce, as well as front-end business ties throughout the cold chain. Each chamber is designed for unitised load handling with simple material handling equipment, and the construction is typically modern PEB with composite panels. Moreover, a beneficiary may apply under MIDH standards for the construction and expansion of a cold storage facility with a capacity of up to 10,000 MT. State horticulture missions are expected to approve projects with a capacity of 5000 MT or less, while the National Horticulture Board will accept projects with a capacity greater than 5000 MT. The cost norms differ depending on the size of the storage capacity.

The Warehousing Development and Regulatory Authority (WDRA) also represents the cold storage sector of India. It was established on October 26, 2010 by Government of India Gazette Notification, under the Warehousing (Development and Regulation) Act, 2007.

The WDRA is a Statutory Authority under Government of India's Department of Food and Public Distribution. The organisation is headquartered at New Delhi. With the implementation of the Negotiable Warehouse Receipt system in cold storages, growers/farmers processing horticulture produce can also benefit from bank concessional loans against NWRs provided by registered cold storages. This will increase liquidity among horticulture produce growers/producers while also ensuring a consistent supply of high-quality fruits and vegetables in the market throughout the year.

Furthermore, wastages in horticulture produce, which are estimated to be about 30%, will be reduced. This will also aid in the commercialisation, successful post-harvest management, and integrated growth of agriculture and horticulture in the country. The states of Andhra Pradesh and Gujarat have submitted applications for  cold storage accreditation and registration under the WDRA. The list of commodities notified under WDRA include, vegetables, fruits, red chillies, ginger, garlic, frozen processed food items.  

Other initiatives by Government include the Scheme for Integrated Cold Chain and Value Addition under the Pradhan Mantri Kisan SAMPADA Yojana of the Ministry of Food Processing Industries. Its objective is to provide integrated cold chain and preservation infrastructure facilities, without any break, from the farm gate to the consumer. It covers creation of infrastructure facility along the entire supply chain viz. pre-cooling, weighing, sorting, grading, waxing facilities at farm level, multi product/ multi temperature cold storage, packaging facilities. The scheme allows for project planning flexibility, with a particular focus on the establishment of cold chain infrastructure at the farm level.

Cold storages have played an important role in connecting farmers with end consumers and alleviating malnutrition around the world including India. Restrictions imposed by the central government, as well as other supply chain barriers, have stifled the growth of cold storages, despite the fact that 96% of them are privately owned. These barriers include poor roads, lack of electrical power supplies that are critical for cold storage facilities.  

The cold storage sector in India also faces other challenges such as safety issues, lack of land availability at suitable locations, lack of adequate and reliable power supply, lack of skilled personnel, high electrical energy usage, damaged or spoilt produce disposal, regulatory barriers such as, the requirement of around 17 licenses from different departments for establishing cold storage in India.

The licenses have to be obtained at local as well as state level, since cold storage is still considered a commercial establishment under the State Shops and Establishments Act. However, the government and technical advisory bodies have been providing support in order to find solutions to these problems, such as, ASHRAE safety standards 15 and 34 and their international equivalents (ISO 5149, ISO 817), which cover certain safety issues like flammability or toxicity. IIAR standards are available for Ammonia for international application. ASHRAE technical standards are incorporated into codes and regulations by other organisations. The National Horticulture Board of India published five standards for cold storages and other related projects, which were later converted into MIDH standards.  

Further, to increase investments and promote entrepreneurship and growth in this sector, the government provides good financial incentives through government institutions such as, National Horticulture Mission, National Horticulture Board, Agriculture and Processed Food Products Export Development Authority, Ministry of Food Processing Industries. They make sure that financial schemes are relevant to the industry's needs and that development is taking place in the right direction.

The schemes are also spread through numerous states in India, taking into account the country's diverse geography. Several organisations, including ISHRAE, ASHRAE, NCCD, NHB, GCCA, IIAR, and others, provide technical assistance. For promotion of cold chain in the country. On September 15, 2020, Lok Sabha passed the Essential Commodities Bill 2020 which aims to remove private investors' concerns regarding undue regulatory intervention in their business operations.

The ability to develop, hold, transport, distribute, and supply would allow for economies of scale to be harnessed, attract private sector and foreign direct investment into the agriculture sector. It will drive the investment in cold storage facilities and the modernisation of the food supply chain.

Globally, Global Cold Chain Alliance (GCCA), represents the cold chain industry as a unified voice. It is supported by three core partner trade associations that include, International Association of Refrigerated Warehouses (IARW), International Refrigerated Transportation Association (IRTA), and Controlled Environment Building Association (CEBA). Moreover, another association, the IACSC (International Association for Cold Storage Construction), supports organisations involved in the construction of cold storage facilities in their interests and needs. It was founded in 1978. IACSC is a core partner of the Global Cold Chain Alliance and has members from all over the world. 

(The author is research director of TechSci Research. He can be reached at sales@techsciresearch.com)
 
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