Factors Impacting The Growth of Cold Supply Chain Sector in India

As a country with the predominant industry being farming, the need on developing the supply chain with the focus on temperature control is nascent and highly disorganised


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India is currently the world's largest producer of milk, the second largest producer of fruits and vegetables and has a substantial production of seafood, meat, and poultry products – all major categories demanding a robust and efficient management of its supply chain. As per a recent Crisil Research report, the Indian Cold Chain Industry is growing at a 13% - 15% CAGR and is set to reach INR 47,200 Crore by 2022, compared to the 11% - 13% CAGR in 2017, which amounted to INR 24,800 Crore.

Biomedical and Pharmaceutical manufacturing is another key driver for growth of the Temperature Controlled Supply Chain. Furthermore, government policies too are aligned to support and leverage this growth. The Indian Government and National Centre for Cold Chain Development (NCCD) are focussed on infrastructure development projects, with 135 cold chain projects, 40 mega food parks, and grants above Rs. 7,000 crore; policies in the form of subsidies, tax benefits, and technical training are adding momentum to the evolution and management of a Cold Supply Chain.

Some of the major trends driving growth of the Cold Supply Chain in India are:

  • Consumer Behaviour: The advent of modern trade supermarkets has changed consumer behaviours and has created a whole new organised food retail demand chain. The availability of processed, frozen and fresh categories of vegetables, dairy, fruits and meats mandate the use of a temperature controlled supply chain from origin to the final customer.

  • Farming Behaviour: Farmers are moving towards cultivation of fruits and vegetables due to better yields and remunerative value, as compared to the risks and investments in grain crops. This, in turn, is driving the requirement of cold stores closer to farms. As a country with the predominant industry being farming, the need on developing the supply chain with the focus on temperature control is nascent and highly disorganised. Only 5% of the bananas harvested in India are actually consumed, whilst there are other countries who manage to export theirs at a premium.

  • Modern Healthcare: Most of the latest innovations in cutting edge medicine, vaccines and biopharmaceuticals as well as clinical trial materials are all heat and humidity sensitive and must be stored at temperatures ranging from negative 45 to positive 25 degrees Celsius. With India's vaccine, bio-pharmaceutical and clinical trials market expected to grow in double digits, we expect a strong demand for efficient cold chain facilities in the coming years.

However, even though there is an influx of funding in this sector by the government and private there remains a void in adequate supply and demand. India's cold chain positioning is still at a nascent stage and faces many challenges like

  • high share of single commodity cold storages

  • derisory transport facilities

  • high initial investment for refrigeration equipment, panelling and more land

  • lack of adequate enabling Infrastructure (roads, water supply, power supply, drainage, etc.);

  • lack of awareness about handling temperature sensitive goods by all stakeholders involved

  • education in this specific area limited only to some major cities in India

  • best in class practices and gold standards not followed and not required by stakeholders due to several of the points mentioned above.

Traditionally, India's cold storage was developed majorly for bulk products like onions and potatoes, with major facilities concentrated in UP, West Bengal, Punjab, and Gujarat. South India, especially Tamil Nadu, with a complex hot and humid environment, reels under the lack of sufficient cold storage solutions, with access to only .0239 of the 30.11 Mn MT capacity of 6,300 cold-chain warehouses nationally. Inadequate cold-chain infrastructure has hampered India's food exports as well, as most developed countries across the world have stringent guidelines for import of agricultural and processed food products.

These challenges have resulted in heavy loss of food and other resources. The losses from agriculture itself has been estimated to be as high as Rs 52,000 to Rs 95,000 crores per annum! There is thus an urgent need for a network of modern multi-chamber cold storages and Cold Transportation infrastructure for commodities requiring temperatures ranging from -30 degrees to +25 degrees.

Safety, global standards of quality, enhanced efficiency, and investments need to be the foundations on which our cold chains need to be built. Being energy intensive (due to refrigeration), these supply chains need to be carefully monitored for their impact on the environment. There is a pressing need to create a reformed workforce to elevate India's standing in the cold chain market globally.

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