The cold chain infrastructure is a crucial part of agriculture and allied sectors. The produce, particularly fresh produce like fruits and vegetables, is perishable and requires a temperature-controlled supply chain involving efficient storage, transportation, and distribution to increase the shelf life of the food grains, fruits, vegetables, livestock products, etc.
Currently, the agriculture and allied sectors contribute 18.3% of the GDP and employ 45.5% of the population. As per the estimates by the Market Research Firm IMARC, the Indian cold chain market size grew to INR 1,81,490 Cr in 2022, and it is expected that it will reach INR 3,79,870 Cr by 2028, exhibiting a growth rate (CAGR) of 12.3% during 2023-2028.
Improving the cold chains and post-harvest infrastructure will significantly reduce waste, create a surplus for exports, and enhance the income of farmers. This will also go a long way in achieving the Sustainable Development Goal of zero hunger, which aims to end all forms of hunger and malnutrition and double the agricultural productivity and incomes of small-scale food producers.
Steps taken by the Government to Improve the infrastructure
Apart from the agriculture and allied industries, cold chain infrastructure is critical for food processing, vaccines and the chemical industry. The Government of India has taken several measures to improve the cold chain infrastructure.
Pradhan Mantri Kisan Sampada Yojana (PMKSY) central sector scheme was approved in 2017 with a total allocation of INR 6000 Cr to create modern infrastructure with efficient supply chain management from farm gates to retail outlets. The Government of India (GOI) has approved the continuation of this scheme with an allocation of INR 4600 Cr till March 2026. The scheme has the following component schemes viz;
(i) Integrated Cold Chain and Value Addition Infrastructure,
(ii) Creation of Infrastructure for Agro-Processing Clusters,
(iii) Creation/Expansion of Food Processing & Preservation Capacities,
(iv) Food Safety and Quality Assurance Infrastructure,
(v) Operation Greens.
The following components of PMKSY support the creation of cold chain infrastructure:
- Integrated Cold Chain and Value Addition Infrastructure scheme promotes integrated and complete cold chain facilities without any break from the farm gate to the consumer, to reduce losses by improving efficiency in collection of farmers produce, storage, transportation, and minimal processing. Both horticultural and non-horticultural produce are eligible for support under this scheme. Under this scheme, as of December 31, 2022, cold storage capacity of 8.38 lakh MT has been created.
- Creation of Infrastructure for Agro-Processing Clusters aims to create modern infrastructure, with preservation facilities and effective backward and forward linkages, for food processing closer to production areas.
- Creation/Expansion of Food Processing and preservation Capacities focuses on promoting processing/preservation of agro-food products and modernization /capacity enhancement of food processing units. During 2022, 120 proposals worth INR 1672.05 Cr have been approved by MoFPI.
- Operation Greens enhances the value realization of Tomato, Onion, and Potato farmers through targeted interventions. The scheme also provides subsidy on transportation/storage. As of 2022, the Ministry has approved 52 projects for setting up of value chain development projects under the scheme.
As per the Ministry of Food Processing Industries, it is expected that the PM Kisan SAMPADA Yojana will leverage investment of INR 11,095.93 Cr, benefiting 28,49,945 farmers and generating 5,44,432 direct/indirect employment in the country by the year 2025-26.
Integrated Cold Chain and Value Addition Infrastructure, being implemented since 2008, provides financial assistance up to INR 10 Cr per project for the creation of infrastructure facilities along the entire supply chain viz. pre-cooling, weighing, sorting, grading, waxing facilities at farm level, multi-product/multi-temperature cold storage, CA storage, packing facility, IQF, blast freezing in the distribution hub and reefer vans, mobile cooling units for facilitating distribution of non-horticulture, horticulture, fish/marine (except shrimp), dairy, meat and poultry.
The integrated cold chain project can be set up by Partnership / Proprietorship Firms, Companies, Corporations, Cooperatives, Self Help Groups (SHGs), Farmer Producer Organisations (FPOs), NGOs, Central / State PSUs, etc., subject to the fulfilment of eligibility conditions of scheme guidelines.
As per the NABARD’s study on All India Cold Chain Infrastructure Capacity (Assessment of Status & Gap), the country requires an additional cold storage capacity of 3.5 million MT. Under the Integrated Cold Chain and Value Addition Infrastructure scheme, 376 cold chain projects have been approved, out of which 268 have been operationalized, respectively.
Mission for Integrated Development of Horticulture (MIDH), being implemented by the Department of Agriculture & Farmers Welfare, financial assistance is provided for various horticulture activities, including construction/Expansion/ Modernisation of cold storages of capacity up to 5000 MT in the country. It aims to achieve the holistic growth of the horticulture sector, covering fruits, vegetables, root & tuber crops, mushrooms, spices, flowers, aromatic plants, coconut, cashew, cocoa, and bamboo.
Under the scheme, assistance is available to individuals, Groups of farmers/ growers/ consumers, Partnership/ Proprietary firms, Self Help Groups (SHGs), Farmers Producer Organisations (FPOs), Companies, Corporations, Cooperatives, Cooperative Marketing Federations, Local bodies, Agricultural Produce Market Committees (APMCs) & Marketing Boards and State Governments.
Capital Investment subsidy scheme for Construction/expansion/modernisation of Cold Storage and Storage for Horticulture Products, being implemented by the National Horticulture Board, provisions credit linked back-ended subsidy at the rate of 35% of the capital cost of the project in general areas and 50% in case of North East, hilly & scheduled areas for construction/expansion/modernisation of cold storage and Controlled Atmosphere (CA) storage of capacity above 5000 MT and up to 10000 MT. In the Northeast region, the units with a capacity above 1000 MT are also eligible for assistance.
Pradhan Mantri Matsya Sampada Yojana, launched in 2020 with an investment of INR 20,050 Cr over a period of five years, addresses critical gaps in fish production, productivity, quality, technology, post-harvest infrastructure — with emphasis on a seamless cold chain — and management, modernisation, and strengthening of the value chain, reduction of post-harvest losses, traceability, etc. The scheme aims to enhance fish production to 22 million MT, exports to INR 1 lakh Cr, and generate about 55 lakh direct and indirect employment opportunities by 2024-25.
In the first two years of its implementation, despite COVID-19’s impact, the fisheries sector registered an impressive growth of 14.3% from 2019-20 to 2021-22. Further, fish production reached an all-time high of 141.64 lakh tons during 2019-20 to 161.87 lakh tons (provisional) during 2021-22.
Priority Sector Lending norms of the Reserve Bank of India cover loans for the construction of storage facilities (warehouse, market yards, godowns, and silos), including cold storage units/cold storage chains designed to store agricultural produce/products, irrespective of their location.
A special fund of INR 2000 Cr has been set up in the National Bank for Agriculture and Rural Development (NABARD) to provide credit at affordable rates to boost the food processing sector. Under this fund, the loan is extended for setting up, modernization, expansion of food processing units, and development of infrastructure in designated food parks.
There is growing importance of the cold chain. As mentioned above, cold chain infrastructure is a critical tool to reduce post-harvest losses and is of utmost importance to the overall food security of India.
Earlier this year, India overtook China as the world's most populous country. As per the estimations of the UN Department of Economic and Social Affairs, India’s population will continue to grow for several decades. This requires ensuring food security by increasing production and eliminating wastage of food and livestock in the entire supply chain. This will not only increase food security but also create more employment opportunities and increase producers’ income and exports.
The opportunities in the cold storage infrastructure are huge, and as illustrated above, the government has adopted a multi-pronged approach to create modern infrastructure keeping in mind the requirements of various sectors. To facilitate the future growth of the cold chain sector, the government is already giving financial incentives to various stakeholders like private sector, SHGs, FPOs, PSUs, local bodies, Cooperatives, APMCs etc to build cold chains. The cold chain sector is bound to grow.