Frost-Free Futures: Navigating India’s Cold Chain Landscape

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:

  • Lack of awareness among farmers, food processors and logistic experts about the benefits of cold storage and cold chain.
  • High cost of building and operating cold storage facilities in India, which is a barrier for startups to venture into this industry.
  • Unavailability of proper equipment, frequent power shortages and lack of skilled workforce.
  • Vehicle breakdowns and inappropriate packaging while delivering temperature-sensitive packaged goods leading to food wastage.
  • Power outages and electricity fluctuations cause breakdown of powered cooling systems, which leads to a lot of waste, as perishable goods get affected by heat exposure for prolonged periods.
  • Cold chain facility is fragmented and virtually non-existent in many states as in India. Only 4 states acquire 60% of the total cold storage – UP, Gujarat, West Bengal and Punjab.

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:

  • AI and ML-based smart sensors and real-time tracking: AI and ML-powered smart sensors offer real-time alerts concerning temperature, humidity, and other environmental conditions, facilitating prompt actions to mitigate losses. Additionally, they aid in tracking vehicle maintenance records, inventory parts, and predicting malfunctions using historical data.
  • Advancements in Last-Mile Delivery Technologies: These technologies facilitates transparent and immutable recordkeeping for Proof of Delivery (POD), which helps in reducing costs, minimizing disputes and updates on real-time shipment tracking and payment processes. Additionally, predictive analytics enables companies to forecast package arrivals and update customers minutes before delivery.
  • Adoption of Sustainable Logistics Practices: With consumers increasingly educated about the advantages of sustainable development, their preference is shifting towards products that are not only fresh and healthy but also sustainably sourced and packaged. Consequently, the industry is placing greater emphasis on sustainable and technological innovations. This trend may inspire businesses of various sizes and forms to adopt modern sustainable practices.
  • Green Technologies in Transport & Warehousing: To enhance sustainability and efficiency, the cold chain sector is embracing innovations such as eco-friendly refrigerants, Phase Change Materials (PCMs), IoT based technologies etc.
  • Data Analytics for Predictive Maintenance: Data analytics has surfaced as a transformative force in the cold supply chain, offering predictive maintenance algorithms driven by AI to anticipate equipment failures and avert downtime.
  • Focus on Skill Development: Acknowledging the necessity of a proficient workforce to navigate the intricacies of the cold supply chain, there is a need of heightened focus on skill development and training initiatives. This encompasses training for personnel in cold storage facilities, logistics professionals, and individuals engaged in maintaining temperature-sensitive transportation.

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:

  • Pradhan Mantri Kisan Sampada Yojana (PMKSY): Approved in 2017, the Pradhan Mantri Kisan Sampada Yojana (PMKSY) was earmarked INR 6000 Cr to establish contemporary infrastructure integrating efficient supply chain management. Continuing till 2026, the scheme retains momentum with an allocation of INR 4600 Cr. It encompasses various component schemes such as the Integrated Cold Chain and Value Addition Infrastructure, creation of Infrastructure for Agro-processing clusters, and initiatives for food safety and quality assurance infrastructure.
  • Integrated Cold Chain and Value Addition Infrastructure: Introduced in 2008, this program offers financial aid of up to INR 10 Cr per project to support the development of infrastructure facilities across the entire supply chain. These facilities include pre-cooling, weighing, sorting, grading, and waxing facilities at the farm level, as well as multi-product/multi-temperature cold storage, controlled atmosphere (CA) storage, packing facilities, individual quick freezing (IQF), blast freezing in distribution hubs, and reefer vans. Additionally, the scheme extends support to mobile cooling units to facilitate the distribution of various products such as non-horticulture, horticulture, fish/marine (excluding shrimp), dairy, meat, and poultry.
  • Capital Investment subsidy scheme for construction/expansion/modernization of Cold Storage: Administered by The National Horticulture Board, this scheme offers a credit-linked, back-ended subsidy. This subsidy covers 35% of the capital cost of the project, with increased support of 50% in North East, hilly, and scheduled areas. It applies to the construction, expansion, or modernization of cold storage and Controlled Atmosphere (CA) storage facilities with capacities ranging from above 5000 MT to 10000 MT.
  • Pradhan Mantri Matsya Sampada Yojana: Initiated in 2020 with a budget of INR 20,050 Cr allocated over five years, this scheme targets vital deficiencies in fish production, productivity, quality, technology, and post-harvest infrastructure, with a particular focus on establishing an integrated cold chain. Additionally, it aims to improve management, modernize, and fortify the value chain, while also reducing post-harvest losses and enhancing traceability. The overarching goal of the scheme is to elevate fish production to 22 million MT, boost exports to INR 1 lakh Cr, and create approximately 55 lakh direct and indirect employment opportunities by 2024-25.

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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