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ColdChain:OpportunitiesinIndiaYESBankDutchEmbassyCollaborativeStudy

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Cold Chain: Opportunities in India- YES Bank- Dutch Embassy Collaborative

Study

WouterVerhey
Agricultural
Counsellor
Netherlands
EmbassyinNew
Delhi

ColdChainisessentialinqualitativepostharvestmanagementandfarmtoforkfoodsecurityandfoodqualityby
efficientlyhandlingagriculturalproductsupstream&downstream.Theresnogainsayingthecrucialroleofcoldchainin
reducingagriculturallosses.Thisstudy,ajointeffortofYESBankandAgricultureDepartmentofEmbassyofthe
KingdomoftheNetherlands,NewDelhi,compilesavailableandrecentliteratureondevelopmentsinthecoldchain
sectorinIndiawithprimaryfocusonMaharashtra,AndhraPradesh,Gujarat&Delhi.Thisstudywillalsohelptoachieve
commercialsuccessbycollaboratingonmutuallyidentifieddevelopmentprojects&willcontributetorespectivebilateral
goalsforbothIndia&Netherlands.

TheIndianperishablesmarketisgenerallycharacterizedbyfragmentation,lowlevelsof
processing,highpotentialforvalueaddition,significantamountsofquality&quantitylossesand
highpricevolatility.Inordertosalvagethesectoroutoftheabovechallengesaswellastoleverage
ontheintrinsicstrengthsoftheIndianperishablesectorforincrementaldomestic&export
opportunities,thecoldchainsectorofferstremendouspotentialtocatapultIndiaintothebigleague
infoodprocessing.WehopethatthereportshallbeofgreatvaluetotheDutchColdChainindustrytoidentifyground
realities,specificopportunities,challengesandprioritiesforchartingouttheirplansfortheIndianmarket.
TheIndianColdChainIndustryAnOverview
Indiahasseenaphenomenalgrowthinproductionofhorticultureproduce,dairyandmeatproductsoverthelastdecade.
Presently,Indiaoccupiesapositionamongstthetopthreeinproductionofahostofcommoditiesincludingspices,
fisheries,poultry,milk,fruitsandvegetables.Butevenwithsuchlargeproductionvolumes,Indiaspresentshareinglobal
farmtradeisstillverysmall.Indiaisthesecondlargestproduceroffruitsandvegetablesintheworldwithproductionof
81.3millionMTand162.2millionMTrespectivelybutitsshareinglobalexportoffruitsandvegetablesisaround1.4%
only.Approximately18%offruitsandvegetablesgetwastedinthecountry.Thisismainlycausedduetolackofcold
chaininfrastructurewhichincludesbothstorageandtransportationfacilities.

NitinPuri,
President&
CountryHead
Foodand
Agribusiness
Strategic
Advisory&
Research
(FASAR)YES
BANKLtd.

ThecoldchainindustryinIndiaisstillatanascentstageanddespitelargeproductionofperishables,thecoldchainpotentialstillremain
untappedduetohighshareofsinglecommoditycoldstorage,highinitialinvestment(forrefrigeratorunitsandland),lackofenabling
infrastructurelikepower&roads,lackofawarenessforhandlingperishableproduceandlapseofserviceeitherbythestorageproviderorthe
transporterleadingtopoorqualityproduce.
However,increasingurbanizationandgrowthoforganizedretail,foodservicingandfoodprocessingsectorareboostingthegrowthofcold
chainindustryinIndia.Thetrendisshiftingtowardsestablishingmultipurposecoldstoragesandprovidingendtoendservicestocontrol
parametersthroughoutthevaluechain.
IndiascoldchainsectorwasestimatedatINR175177billion(~USD2.9billion)during201314
8890%ofmarketshareiswiththeTemperatureControlledWarehouses(INR162billion(USD2.7billion)6500+stores,30.4millionMT
Capacity)
Remaining1012%comprisesofTemperatureControlledVehicles(INR1314billion(~USD0.2billion)8000+vehicles).
Itishighlyfragmentedindustryandunorganizedsectoraccountsforanestimated8085%shareofthetotalcapacity.
Wholesalersandorganizedretailersarethekeyusersegmentsofcoldchainserviceswithashareof7075%and1015%respectively.
Currently,about68%ofthetotalcoldstoragecapacityisconcentratedinthestatesofWestBengal,UttarPradeshandBihar,wherein
storageofpotatoesaccountsfor8590%ofthecapacity.
Potatoesaccountedfor68%oftotalvolumeshandledfollowedbymultipurposestoragewhichaccountedfor30%.Invalueterms,
multipurposestoreshavethelargestshareof77%whiletheshareofpotatoeswasamere17%.
ColdChain:OpportunitiesinIndia

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YESBankincollaborationwithEmbassyoftheKingdomoftheNetherlandshaspreparedareportonColdChainOpportunitiesinIndia
whichgivesanoverviewofthecoldchainsectorinIndiaincludingpresentstoragecapacity,regulatoryframeworkandsubsidies,trends,
growthenablers,challengesandkeysuccessfactorsoftheindustry.ThereportalsohighlightsthecoldchainscenarioinkeystateslikeAndhra
Pradesh,Maharashtra,GujaratandDelhi/NCRwithfocusonthekeyperishablecommoditieslikemeat,marine,dairyandfruits&vegetables.
ColdchainindustryisatanascentstageinIndiaandmultipleopportunitiesforinterventionarepresentacrossthevaluechain.The
commoditiesforthestudyhavebeenselectedfromarangeofcommoditieswherecoldchaininterventionsareatvariousstagesof
developmentandthereisapotentialtofurtherdevelopthemarketinfuture.Theselectedstatesandcommoditiesforthestudyinclude
States

Commodities

AndhraPradesh

Mango,Marine&MeatProducts,Milk&MilkProducts

Maharashtra

Onion,Citrus,Banana

Gujarat

Potato,Fish,Milk&MilkProducts

Delhi/NCR*

Apple,Mango,Milk&MilkProducts

*includingCAstorageofApplesinHimachalandJ&K
StateProfilesASnapshot
1.AndhraPradesh
Withannualproductionofaround28.9millionMTofhorticultureproduce,AndhraPradesh(AP)stands2ndinthecountrynexttoWestBengal.
AndhraPradeshranksamongtop5statesinproductionoffruits,vegetables,spicesandmeat.Presently,thereareonly371coldstoragesin
thestatewithatotalcapacityof1.4millionMT.Morethan90%ofthecoldstoragesaremultipurposefollowedbydedicatedcoldstoragesfor
Meat&Fish,Fruits&VegetablesandMilk&MilkProductswithacumulativeshareof6%.Only1%ofthecoldstoragesstoreFruitsand
Vegetablesexclusively.MajorityofthecoldstoragesarelocatedinGunturregionwhichareprimarilyusedforstoringChili.Thecommodities
forwhichprofilingisdoneinAPincludemango,meat,marineanddairyproductsabriefofwhichisgivenbelow.
Mango
APisthelargestproducerofmangowithproductionamountingto4.4millionMT(accountingfor24%ofIndiasmangoproduction).Themajor
marketsformangoareindistrictsofChittoor,KrishnaandKadapa.ThemajorvarietiesareBaiganpally,Suvarnarekha,NeelumandTotapuri.
Mangoripeningisstilldoneusingcalciumcarbidepresentinganopportunityforestablishmentofmodernripeningchambersnearbyurban
consumptioncenters.Thereisalsoahugepotentialtodevelopandpropagatecontrolledatmosphere/modifiedatmospherestorageofmango
toincreaseshelflifeandgainpricearbitrageduringoffseason.
Apartfromdomesticconsumption,mangoisalsousedtopreparemangopulp,whichisproducedfromspecificvarietieslikeTotapuriand
Alphonso.ThemarketsizeofmangopulpindustryinIndiaisapproximatelyINR15billion(~USD245.9million)[1]ofwhichAPaccountsfor
about5060%.Mangopulppackedasepticallyisgenerallykeptunderambientconditionsbutnowthetrendischangingandindustryisusing
coldstoragesforstoringmangopulp.
MarineProducts
APisthemajorseafoodexportingstateofIndiawithits3540%oftheproducebeingexportedtohighlyremunerativemarketslikeEU,Japan
andUSA.Thefrozenshrimp(invalueterms)isthemajorcommodityexportedfromthestate.Thestatehasculturedshrimpproductionof
vanameivarietyataround300,000MT,ofwhichapproximately8090%isexportedafterbeingprocessed.Thereisapotentialtointerveneat
alllevelsofvaluechainfromgrading/sortingatfarmleveltofinalprocessedproductduetotheexpansionoftheindustry.Technology
interventionsincoldstorage,transportation,icemakingplantsflakeandtubeice,freezingunitsIQF,platefreezers,blastfreezer,freezercold
storagesetc.canbeutilizedforinducingefficienciesandreducingwastages.
Meat
APisthe3rdlargestproducerofbuffalomeat(117,690MT)majorityofwhichisexported.InIndia,meatismostlyconsumedinfreshform.
Withpolicyformodernabattoirsbythecentralgovernment,coldchaincouldbeintegratedtomeetthedemandofdomesticmarket.
MilkProducts
Thestatehasrecordedhighestgrowthinmilkproductionandpercapitamilkavailabilityaswell.Reductioninspacerequiredofcoldchain
machineryandcosteconomizationarethetwomajorinterventionsthatcanbelookedintofordairyindustry.
2.Maharashtra
Maharashtraisthesecondlargestproduceroffruitswithtotalproductionof9.8millionMT.Thecommoditiesforwhichprofilinghasbeendone
inMaharashtraincludeonion,citrusandbananaabriefofwhichisgivenbelow.
Onion

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InMaharashtra,Nasik,Ahmednagar,PuneandSataraarethemajoronionproducingdistricts.Majorityofthecrop(~5060%)isproducedin
rabiseasonwhichhasgoodstoragequalityasthevarietygrowninthisseasonhashigherTSS,drymatterandmorenumberofouterdried
intactscales.Foronion,entiredomesticsupplychainisviaambienttemperatureandcoldchainismaintainedonlyforexports.Thereisa
potentialtointroducetechnologyforlongertermstorageofonionandharvestingprocedureforeffectivecoldchaininterventioninthecrop.
Citrus
Maharashtraranks4thinthecountrywithtotalcitrusproductionof878,000MT.Citrusindomesticmarketisgenerallystoredandtransported
underambientconditions.Itisalsoaseasonalcropavailablefor67monthsonly.Playersarestoringsecondseasoncropundercoldchainas
ithasgoodstoragequality.Newagecoldchaininterventionscouldbeadoptedforlengtheningthestoragetimeofthecitrusfruits.
Banana
WithBananaproductionof3.7millionMTMaharashtraranks3rdinthecountry.Nasikdivision(Nasik,Dhule,Nandurbar,Jalgaon)andLatur
division(Latur,Osmanabad,Nanded,Parbhani,Hingoli)contributesto48%and35%oftotalbananaproductioninMaharashtra.Incaseof
banana,thereisminimalpostharvestinfrastructureinMaharashtraatpresent.Thus,majorinterventioncanbetakenupfortheregionin
termsofestablishmentofmodernpackhousesatmainproductionclusterswhichwouldcatertothebananaandcitrusgrowninthe
surroundingarea.
3.Gujarat
InGujarat,themajorcategoriesforwhichcoldchainismaintainedarefruits&vegetables,marineproduce,milk&milkproducts.The
commoditiesforwhichprofilinghasbeendoneincludepotato,fishanddairyproductsabriefofwhichisgivenbelow.
Potato
Intermsofpotatoproduction,Gujaratranks6thafterUP,WestBengal,PunjabandBiharbutithasauniqueadvantageofbeingthestate
capableofproducinggoodqualityprocessingvarietiesofpotato.TotalpotatoproductioninGujaratduring201213was2.5millionMT.
Presently,afewentrepreneurshavestartedconstructionofmodernpotatocoldstoragesusingtechnologyintheareasofstorageventilation,
coolingsystemandprogrammedlogiccontrollerequipment.Newtechnologieswillberequiredforstorageofprocessinggradepotatoas
companiesareexpandingtheirprocurementfromGujarat.
Fish
Gujarathasalongcoastlineextendingto1,600km,acontinentalshelfareaof0.18millionsquarekmandExclusiveEconomicZone(EEZ)of
0.214millionsquarekm.Fishforconsumptionindomesticmarketisnotprocessedandisstorediniceflakesfortransportation.Veravaland
PorbandararekeyfishlandingcentersinGujarat.InVeraval,around50factorieswiththeprocessingcapacityof2002,500MTcapacityare
located.AllthefactoriesinVeravalare100%exportorientedunits(EOU)exportingtheprocessedfishtocountrieslikeChina,Korea,Japan,
CanadaandEurope.Thepotentialexistsinprovidingcosteffectivecoldchainsolutionsstartingfromicemanufacturing/handling,refer
vans/insulatedvehiclesandcoldstoragestoimprovethequalityoffish.
MilkProducts
DairyindustryiswellestablishedinGujaratandhasbeentakenasamodelforotherstatesinthecountry.Anandmodelcooperativedairying
hasemergedasoneofthesuccessfuldairydevelopmentprogramsinIndia.Dairyplayersarestilllookingforcosteffective,energyefficient
andspacesavingtechnologyinterventionsinchillingandstorageofmilkandmilkproducts.
4.Delhi/NCR
InDelhi,thetotalcoldstoragecapacityis126,158MToutofwhichmultipurposeandmilk&milkproductscoldstoragesaccountsfor93%and
4%respectively.ThecommoditiesforwhichprofilinghasbeendoneinDelhi/NCRincludeapple,mangoandmilk&milkproductsabriefof
whichisgivenbelow.
Apples
InIndia,ControlledAtmospheric(CA)stores,whichusemoreadvancedtechnologies,aremostlydedicatedtoapples.Applesarrivingin
Delhi/NCRregionaremainlyprocuredfromHimachalPradeshandJ&K.Withincreaseindemandofgoodqualityproducethepercentageof
applesgoingunderCAstorageisboundtoincrease,indicatingapotentialforcoldstorageoftheproduce.Presentlyapplesaretransportedat
ambienttemperaturefromtheproducingregionstoconsumptionmarkets.Transportationofapplesundercoldchainandprecoolingafter
harvestingarethepotentialareaswheretechnologicalinterventionisrequired.
Mango
InDelhi/NCR,mangoismajorlyprocuredfromUttarPradesh,MaharashtraandAndhraPradesh.SomeplayersinDelhi/NCRare
experimentingtostoremangoundercontrolledatmosphericconditionsatasmallscalebuthaveachievedlimitedsuccess.Increaseinshelflife
andripeningofmangohaspotentialforintervention.

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MilkProducts

ThetotalDelhi/NCRliquidmilkmarketsizeisestimatedat7.6millionlitresperdaywhichtranslatesto2,774millionlitresannually.Milkbeinga
highlyperishablecommodity,coldchainismaintainedstartingfromthemilkprocurementinvillagestotheretailerlevelandthereisapotential
tomaximizetheoperatingefficienciesinthealreadyestablishedcoldchainbyintroductionofenergyefficientlowcosttechnologies.
KeyOpportunities
ThecoldchainindustryisanemergingandfastgrowingbusinesssectorinIndia.Consideringthecurrentlevelsoffruitsandvegetables
wastagealongwithfocusonfoodsafetyandsecurity,coldchainfacilitieswillplayanimportantroleinmeetingthedemandoffoodinthe
country.Developmentinthefoodprocessingsectorandorganizedretail,governmentinitiatives,increasinginvestmentsaswellasincreasing
willingnessonthepartofconsumerstopayapremiumforhigherqualityoffoodproducts,willdriveoverallgrowthfortheindustry.However,
interventionsarerequiredtobringdownoperatingcosts,toimprovequalityofendproduce,foradoptionofnewtechnologysolutionsand
trainingofmanpower.Someofthepotentialareasofinterventioninclude
Controlledatmosphere/modifiedatmospherestorageforextensionofstoragelifeofperishables
Newtechnologiesforstorageofprocessinggradepotato
Lowcostsolutionsforprecoolingatfarm
Modernpackhousesandripeningchambers
Innovation,costeffectivenessandservicesupportinreefertechnology
Lowcosttechnologyforautomationofoperationsinacoldstore
Spaceandenergysavingsolutionsincoldstorage
[1]1USD=INR61

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