India’s Cold Chain Industry

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Country: India’s Cold Chain Industry
Renie Subin August 2011

Summary
India is an agricultural-based economy. More than 52 percent of India’s land is cultivable, compared to the global average of 11 percent. Each year, India produces 63.5 million tons of fruits and 125.89 million tons of vegetables. India is also the largest producer of milk (105 million metric tons per year). India produces 6.5 million tons of meat and poultry, as well as 6.1 million tons of fish a year. The perishable products transaction volume is estimated to be around 230 million metric tons. Although India has the potential to become one of the world’s major food suppliers, the country’s inefficient cold chain network results in spoilage of almost 40 percent of its total agricultural production. The total value of the cold chain industry is estimated to be as high as USD 3 billion and growing at 20-25 per cent a year. The total value is expected to reach USD 8 billion by 2015 through increased investments, modernization of existing facilities, and establishment of new ventures via private and government partnerships. The Indian agricultural sector is witnessing a major shift from traditional farming to horticulture, meat and poultry and dairy products, all of which are perishables. The demand for fresh and processed fruits and vegetables is increasing as urban populations rise and consumption habits change. Due to this increase in demand, diversification and value addition are the key words in the Indian agriculture today. These changes along with the emergence of an organized retail food sector spurred by changes to Foreign Direct Investment laws, are creating opportunities in the domestic food industry, which includes the cold chain sector. As a result of the Government of India’s new focus on food preservation, the cold storage sector is undergoing a major metamorphosis. The Government has introduced various incentives and policy changes in order to curtail production wastage and control inflation; increase public private participation and improve the country’s rural infrastructure. We project that the Indian cold chain sector will expand at a faster rate in the near future and recommend all U.S. companies selling to the cold chain industry to learn more about the market to position themselves to take full advantage of emerging opportunities.

Market Demand and Market Data
The total value of India’s cold chain industry is currently estimated at USD 3 billion and reportedly growing at an annual rate of 20-25 per cent. The total value for the industry is expected to reach at USD 8 billion by 2015 through increased investments, modernization of existing facilities, and establishment of new ventures via private and government partnerships. India’s cold chain industry is still evolving, not well organized and operating below capacity. Most equipment in use is outdated and single commodity based. According to government estimates, India has 5,400 cold storage facilities, with a combined capacity of 23.66 million metric tons that can store less than 11% of what is produced. The majority of cold storage facilities are utilized for a single commodity, such as potatoes. Most of these facilities are located in the states of Uttar Pradesh, Uttaranchal, Punjab, Maharashtra, and West Bengal. The following table shows distribution of facilities by commodity:

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Commodity Capacity (million tons) Potato 9.282 Multi-purpose 0.763 Fruits & Vegetables 0.107 Meat 0.009 Fish 0.073 Meat & Fish 0.015 Milk & Dairy Products 0.068 Others 0.036 Statistical data are unofficial estimates from industry sources In addition, India has about 250 reefer transport operators (this includes independent firms) that transport perishable products. Of the estimated 25,000 vehicles in use, 80% transport dairy...
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