Cold Storage and Cold Chain Business in India

cold storage

The estimated annual production of fruits and vegetables in the country is about 130 million tons accounting for 18 percent of our agricultural output.  Moreover, the lack of cold storage and cold chain facilities are becoming major bottlenecks in tapping the vast potential. The cold storage facilities now available are mostly for a single commodity like potato, orange, apple, grapes, pomegranates, flowers, etc. which results in poor capacity utilization.

Many of you who don’t know about Cold storage and Cold Chain Business in India, In the supply chain, the produces hauls at different stages before it finally reaches the hand of the end-user. i.e. form factory to retailers and retailer to end-user. At this process of the supply chain, it needs to be originated so as to preserve its freshness and stretch its life. This breath of life and freshness is provided by cold storage. Produce, seafood, meat, pharmaceuticals, and biomedical products, etc. are some items that need cold storage.

Major vegetables and fruits are grown in India are Mango, Grapes, Apple, Avocados, Guava, Litchi, Papaya and Water Melons, Potato, Onion, Tomato, Cauliflower, Cabbage, Bean, Garlic and okra, etc. Mango accounts for 40 percent of the national fruit production and India is one of the leading exporters of fresh table grapes to the global market.

Opportunity In India

The changing food habits are discernible. There has been positive growth in ready-to-serve beverages, fruit juices and pulps, processed fruits and vegetable products, i.e., dried or preserved and dehydrated vegetables and fruits such as sauces, preserved onions, cucumbers and gherkins, green pepper in brine, dehydrated garlic and ginger powder, dried garlic and ginger, tomato products, pickles and chutneys, processed mushrooms and truffles and curried vegetables.

Out of the 3443 cold storage units in India, 2975 are in the private sector, 303 are in the co-operative sector and the rest are in the public sector. India’s vast produce rot due to lack of cold storage resulting in increased cost of the same product as they die before they could even enter the market.

Govt. of India promoting cold storage warehouse investments by providing subsidies up to 50% to 75% on Investment. The nationalized banks of India are also proving loans for cold storage projects. In recent times cabinet also approved the amount of 6000 crore rupees for mega food processing projects. The country requires 3.5 crore tons capacity cold storage facilities and if somebody is looking for starting a business this is the right time.

Nearly one-third of our horticultural produce, especially fruits and vegetables are wasted, mainly on account of poor cold storage and other storage facilities. Wastage of fruits and vegetables due to poor post-harvest management and lack of cold chain facilities have been estimated to cost up to Rs 500 billion annually. The country also experiences wide fluctuations in the prices of horticultural produce, particularly potatoes and onions. The cold storage chain will help boost exports of agricultural and allied produce, marine produce, etc.

Location :

The project may be located anywhere in the country suitably either near the producing farms or consumer centers.

Project cost : 

The project cost for setting up of 5000 MT Cold Storage may be in the range of Rs.350 – 400 lakh, including the cost of the land.

Estimated Capital Outlay            (Rs.in lakh)

  1. Land and land development – 50.00
  2. Building and civil works –         85.00
  3. Plant & machinery –                 148.00
  4. Utilities –                                     23.00
  5. Technical Know-how –               2.00
  6. Misc. fixed assets –                  20.00
  7. Pre-operative expenses –        17.00
  8. Contingencies –                        13.00
  9. Margin money –                        12.00

               Total           –                    380.00

Financial assistant for setting up cold Storage chain:

Ministry of Food Processing Industries provides financial assistance up to 50% of total cost and machinery and other works. 75% grants in aid to Northeastern states including Sikkim and difficult states include Himachal Pradesh, J&K, and Uttrakhand subject to a maximum of 10 crores.

To get the subsidy from the ministry the land where you are planning to start Cold storage must be registered in the name of your or in the name of your any of the partners. Once you get approval for subsidies nationalized banks will also provide you a loan with ease. Nationalized banks provide loans for cold storage in two ways:

  • Construction of Cold Storage: banks will provide loans up to 80% of the total construction cost of Cold Storage.
  • Cold Storage for Rent: banks will provide loans up to 90% of the total rental cost of Cold Storage.

SBI and Oriental bank of India provides these types of loan for the period of 11 years and 1 grace year also. for this, you must have a registered land or lease agreement for a minimum period of 40 years of that land where you are planning to start Cold Storage.

NABARD Loan for Warehouse and Cold Storage

Consequent to the announcement of an allocation of Rs. 5,000 crore to NABARD in the 2014-15 budget for supporting the creation of infrastructure for storage of agricultural commodities, Reserve Bank of India (RBI) issued guidelines for the creation of Warehouse Infrastructure Fund (WIF 2014 -15) in NABARD. The Fund envisages the extension of loans to Public and Private sectors for the construction of warehouses, silos, cold storage, and other cold chain infrastructure.

Loans will be provided for projects involving the creation of storage infrastructure with a minimum aggregate capacity of 5000 metric tons (MT) for agricultural and allied produce, including the construction of:
  • Warehouses
  • Silos
  • Cold storage, controlled atmosphere (CA) stores, other cold chain infrastructure activities like pack houses/integrated pack houses, reefer vans, bulk coolers, individually quick frozen units, chilling/freezing infrastructure, etc.
  • Construction/modernization/ up-gradation of Marketing infrastructure facilities of Agricultural Produce Marketing Committee (APMC).
  • Modernization/improvement of the existing storage infrastructure projects will be considered on the merit of each proposal provided it leads to scientific/additional storage capacity.
  • There’s no minimum capacity for projects of Governments/ Government-owned corporations.
Eligible Institutions/Entities
  •  State Governments
  • State/Central Government Owned/assisted entities, Cooperatives, Federations of Cooperatives, Farmers, Producers’ Organizations (FPOs), Federations of Farmers’ Collectives, SPVs set up under PPP mode, etc.
  • Primary Agricultural Credit Societies (PACS) / Cooperative Marketing Societies (CMS) or similar institutions
  • Corporate/Companies/Individual Entrepreneurs etc.
  • Agricultural Produce Marketing Committees (APMCs)

Our Next Article will be based on the Registration procedure of Cold Storage in India.

Read And learn

You need to learn before Earn. Here is the collection of books that you can read and know how to start Cold storage unit and earn a very fancy income.

Cold Storage Unit: Book 1 (Read More)

Cold Storage Warehouse: Book 2 (Read More)

Want to know about the other low-cost business and how these are very profitable after Corona? Read Below

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Rajendra Kumar

I love creating content that helps people. Whether it's teaching them how to code, helping them find the perfect digital marketing solution, or teaching them how to make money online, I'm here to help.

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