Cold chain a means to tackle food inflation

India’s cold chain capacity stands at 30 million MT, whereas it produces around 200 million MT of fruits, vegetables and other perishable farm goods.The situation demands an increase in installation of multi-product cold storage facilities in the country. Mohd Mustaquim reports
Cold chain a means to tackle food inflation

India’s cold chain capacity stands at 30 million MT, whereas it produces around 200 million MT of fruits, vegetables and other perishable farm goods. Most of the cold chain facilities are concentrated only in three to four states of the country. And out of the entire cold storage capacity, 70 percent is just for potato. The situation demands an increase in installation of multi-product cold storage facilities in the country.

The challenge lies in managing perishable items which poses a serious problem with an annual wastage of around Rs 44,000 crore. It not only increases the prices of fruits and vegetables in the market but also proves the deficiency of cold chain capacity, with the farmers facing big economic loss, and an overall negative impact on the rural economy as well.

Commenting on the scenario, Harsimrat Kaur Badal, Union Minister for Food Processing Industries, says, “Figures show that thousands of crores is lost due to wastage. That’s the tip of the iceberg; in reality, the figures are much higher. What we need is a cold chain grid in the country. The ministry is working towards a national food processing policy to bring under one umbrella different stakeholders presently engaged in the development of the food processing sector. Unless we bring down waste, we cannot control inflation.”

Cold chain plays an integral part in ensuring sufficient stock of food, and thus a means to combat food inflation. India is the second largest producer of fruits and cereal, third in marine production and has the largest livestock in the world. Despite this, the country has big disparity in food production and food processing.


The biggest challenge the industry faces is electricity, without which cold chain cannot be successful. According to P Alli Rani, Director (finance), Container Corporation of India (CONCOR), availability of land and good transportation connectivity are also the major challenges in developing warehousing infrastructure. She further adds, "The capital intensive functioning of cold chains, sometimes, stops functioning. Many cold chains have stopped functioning due to their operational cost. Farmers cannot afford all the cost. Thus, the operational cost also be subsidised by the Government."

On the need to innovate and create awareness and integrate different skill sets and competency, Sanjeev Chopra, Joint Secretary, Ministry of Agriculture, Government of India, says “Innovation and integration is required to have a business model. The country needs to be connected with the flow of goods; it is only with regular sustained supply of goods that the government can reduce price fluctuations.”


To give a boost to the cold chain and warehousing sector, the Central Government had allocated Rs 5000 crore for a new Warehousing Scheme in annual budget 2014-15. The scheme was launched on October 29, 2014. National Bank for Agriculture and Rural Development (Nabard) will implement the programme. National Centre for Cold-chain Development (NCCD) in association with Warehousing Development and Regulatory Authority (WDRA) has made some guidelines for disbursement of the fund.

“A fast-track window is now open for direct lending to private players by Nabard. All cold chain components, pack-houses, reefers, cold stores, add-on technologies are eligible to get lending from the scheme. Stakeholders also have expressed great interest,” says Pawanexh Kohli, CEO and chief advisor, NCCD.

“The industry welcomes the initiative, this proactive role of Nabard, of providing a dedicated lending to the sector. As a result, cold chain development in the country will get a fillip,” says Sanjay Kaul, chairman, National Collateral Management Services Limited (NCML).

Usually, Nabard refinances the states and government institutions, but this fund will be made available for anyone, including private companies or entrepreneurs, interested in cold chain sector. An applicant can apply at the district offices of Nabard, and it will be handled by the central office of this rural development bank.

According to Nabard, during this year, projects related to dry and wet storage will be assisted out of this fund, and will have a greater focus on cold chain infrastructure. Beside state governments and government-owned entities, cooperatives, farmer producer organisations, federations, private corporate companies can also avail loans from this fund for cold chain infrastructure development.

Moreover, the state horticulture missons also provide subsidies to the cold chain projects in their respective states. Earlier, an applicant had to apply at nationalised banks for loans which was available at a rate of 14-15 percent. However, the fund released under this warehousing scheme, will be available at the rate of 9.25-9.75 percent.

India’s greatest need is for an effective and economically viable cold chain solution that can integrate the supply chain for all commodities from production to consumption centres, thereby reducing physical waste and loss of value of perishable commodities.

Food processing industry is going to play a vital role in the growth story of the country. The sector can contribute 6.5 percent India’s GDP by FY15, says a FICCI-KPMG report.  

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