India is the world’s largest producer of milk, second largest producer of fruits and vegetables and a significant producer of seafood, meat and poultry. Due to their perishable nature, these products necessitate a temperature-controlled supply chain, encompassing effective storage, transportation, and distribution methods to extend the shelf life of food grains, fruits, vegetables, livestock products, and so forth.
According to the Food and Agriculture Organization, approximately 1.3 billion metric tonnes of food is lost yearly, which accounts to over one-third of global food production. These losses are estimated to be between US$ 8 billion to US$ 15 billion annually, and a key contributor is the lack of adequate supply chain infrastructure, connectivity and cold storage facilities. This article takes a closer look at current status, ongoing developments and business prospects in this lucrative industry.
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India’s cold chain industry, while still in its nascent stages, carries immense potential, especially against the backdrop of India’s trajectory to become the world’s fifth-largest economy by 2027. The significance of cold chain logistics cannot be overstated, particularly in a country where agricultural produce forms a substantial portion of its economy. It is understandably a very prominent focus area for policy makers in the present time.
Cold chain ensures the seamless transportation and storage of perishable goods such as fruits, vegetables, dairy products, and pharmaceuticals, maintaining their quality and extending their shelf life. This not only meets the burgeoning demand for fresh produce but also significantly curtails wastage along the supply chain, a critical concern in a nation where post-harvest losses are substantial. Moreover, this can help create surplus for exports and enhance farmer incomes.
With projections indicating substantial growth, investment in India’s cold chain infrastructure is poised to witness a robust surge, reflecting its pivotal role in sustaining the economy and reducing food and product wastage. India’s cold chain industry is still in its infancy and holds a promising future. Since India is set to become the world’s fifth largest economy by 2027, investment in India’s supply chain infrastructure is expected to witness robust growth. India’s cold chain logistics market was estimated at US$ 9.75 billion in 2023 and is expected to grow to US$ 12.85 billion by 2028 at a CAGR of 5.67% (Mordor Intelligence).
Cold chain infrastructure and challenges in India
An efficient cold chain infrastructure involves movement of temperature-sensitive goods from one place to another within a required time frame. It requires a stable chain of refrigerated manufacturing, production, storage, packaging, tracking, transportation, management and safe and secure delivery and distribution. Presently, there are 8,653 cold stores in the country with a capacity of 394.17 lakh MT, whereas only 60% of this facility is being utilized. Cold chain infrastructure is also critical for the chemicals and vaccine industry.
India typically sees an average annual temperature of 30 degrees Celsius, soaring to as high as 45 to 50 degrees Celsius during the summer months. Unfortunately, the intricate geographical terrain and logistical challenges compromise the infrastructure for maintaining cold chains. Consequently, many temperature-sensitive products transported within the country often arrive damaged or degraded due to insufficient or broken cold chain systems and other challenges such as:
Emerging Solutions and Opportunities
Creating an unbroken cold chain network necessitates maintaining temperature-controlled conditions throughout all phases of cold chain logistics. With a 15-20% rise in the demand for fresh produce, grocery deliveries, vaccinations, and pharmaceuticals, there exists a fertile ground for innovation and technological progress, presenting significant opportunities for Indian startups.
Cutting-edge cold chain technologies like payment automation, robotics, packaging innovation, warehouse automation are some of the technologies adopted by businesses. Here are some of the technologies that could help transform the cold chain sector in upcoming years:
Speaking on growth and prospects of the cold chain infrastructure in India, Anurag Dubey, Business Head, Tan90 Thermal Solutions Pvt Ltd states –
“India’s cold chain market is booming at a predicted 10% CAGR and above, driven by increased demand post-Covid. This is crucial as India previously wasted 40% of its produce due to lack of cold chain infrastructure. Although progress has been made, with capacity now exceeding 2%, there’s still an 80% demand gap, particularly in remote areas. Limited supply of cold vehicles and ice further exacerbates the issue. However, there’s optimism as aggregator platforms invest in cold chain infrastructure, led by farmer produce organizations. Despite progress, there’s immense scope for development to meet growing consumer demands.”
He further adds that cold chain infrastructure has seen substantial growth to meet the demands of the pharmaceutical industry, offering high profit margins for organizations. However, a similar focus on infrastructure for the food industry is lacking, which could be concerning given the larger volumes and lower profit margins.”
As the cold chain infrastructure is a crucial for the growth of agricultural, pharma and allied sectors, the government has introduced various schemes and policies to support the growth of the sector and to boost output. Some of them are:
India’s cold chain infrastructure stands as a cornerstone in bolstering food security and mitigating post-harvest losses, crucial for the sustenance of a burgeoning population. While commendable strides have been made, persistent hurdles persist, notably in enhancing capacity, efficiency, and accessibility, particularly in rural and remote regions. Yet, the blueprint for advancement lies in sustained investments, innovative solutions, and cohesive partnerships among stakeholders. By fostering a culture of collaboration, facilitating investments and prioritizing technological innovation, India’s cold chain network holds the promise of not only meeting but surpassing the evolving demands of an ever-changing agricultural ecosystem.
Moreover, as India’s logistics infrastructure continues to evolve and modernize, there’s a promising prospect of bolstering the efficiency of cold chain utilization, which currently operates below optimal levels. The integration of advanced logistics systems and practices promises to streamline the movement of goods, enhance supply chain visibility, and ultimately elevate the effectiveness of cold chain operations, thereby catalyzing broader economic growth and sustainability initiatives.
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