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INTERVIEW

“Food habits, govt policy driving growth of cold storage,” states Guru
Monday, 15 January, 2018, 08 : 00 AM [IST]
The Federation of Cold Storage Associations of India (FCAOI) is a pan-India body, with members in most of the states. While the foundation of this federation was laid in 1999, it was formally registered on August 16, 2001. Ashish Guru, senior vice-president, FCAOI, and president, Gujarat Cold Storage Association, spoke about the future prospects and growth drivers of the cold chain sector in India in an e-mail interaction with Anurag More. Excerpts:

How has the cold chain industry in India evolved over the years?
The cold chain industry, which has been working for the milk and seafood segments over the years, has now picked up frozen vegetables and ready-to-eat snacks, mainly for exports and local consumption.

What are the future prospects of the cold chain industry in India?
India is a big market, with a population of 125 crore people, and the second highest producer of fruits and vegetables in the world. Yet, we are still witnessing high prices of perishable agricultural produce in the season as well as in the off-season. To reduce the fluctuations in the prices of these, to preserve freshness, to reduce losses, and to help farmers to increase their incomes from the exports of such commodities, we require end-to-end cold chain facilities. Eggs are a good example this season.

Tell us about the current demand and supply of cold storage in India.
In India, cold storages stored a single commodity (potatoes). Due to the support of the government, the numbers greatly increased in the states of Uttar Pradesh, Gujarat, Madhya Pradesh, Tamil Nadu and Maharashtra. As per an estimate by the government of India, we require 62,000 bulk cold storage, and only 7,500 cold storages are presently working.

What are the respective contributions of organised and unorganised players to the country’s cold chain industry?
Very few organised players operate in the cold chain industry, which predominantly comprises fragmented unorganised players like cold storages, pack houses, pre-cooling units, refrigerated transport and urban cold chain infrastructure. They continue to contribute to the growth of the cold chain sector.

What are the growth drivers for the industry?
Food habits of people: Looking at the people of developed and Asian countries, people are vegetarian and prefer fresh produce over frozen ones. The rise in the incomes of the urban population creates more demand for poultry and value-added products like dairy products
Increase in the rural income of people: After two years of drought, we have had a good monsoon this year. We are expecting the rise in rural incomes to create the demand for fruits, dairy, frozen vegetables, quick-serve snacks, etc.
Government policy: The Central government is constantly monitoring support schemes to the cold chain sector. It needs base support, which is likely to bring a positive outcome for the growth of the cold chain industry. Infrastructure status and benefits given to this sector would definitely help

Agricultural infrastructure: Expediting highway construction needs to be looked at in the country. The availability of electricity is continuously improving in the rural areas. These are irrigation facilities, alternative markets for farmers, low interest rates, increase in the crop loan amount and increasing use of solar energy for solar pumps. Not only will the cold chain industry grow, but there will be an increase in the farmer’s incomes too

What steps is the industry taking to overcome the challenges, such as the lack of quality cold warehousing infrastructure, the low awareness of labour in handling temperature-sensitive products, the high fuel cost, power cuts, etc.?
More and more cold storages are modernised using polyurethane foam (PUF) panels, digital automation, material handling system and adopting state-of-the-art technology to reduce the fuel bill. The industry also initiated rooftop solar power plants to reduce the energy bill.

Gujarat has over 30 cold storages having solar system installation of over two megawatt power.

Now Uttar Pradesh, Madhya Pradesh, West Bengal, Rajasthan and Tamil Nadu are looking for solar systems under the guidance of FCAOI.

What are the initiatives taken by the government for the industry?
  • Cold storages on major air and sea ports to increase the exports of perishable agri produce
  • Policy for skilled manpower
  • Capital investment subsidy for subsidy installation of rooftop grid-tied solar system
  • Thrust for pack houses - ripening chambers and reefer transportation
  • Allocating more funds for the sector
  • Lower bank interest rate for cold chain sector
  • Some state government and offering interest subvention and added subsidies
  • Simplified procedure for availing the government subsidy scheme
  • Freight subsidy to farmers in case of higher production of potatoes
According to you, what are the key challenges faced by the industry?
The utilisation of the cold chain sector and the two-way use of reefer vans, ripening chambers and pack houses must be increased at a greater speed. Potatoes, being a single commodity stored by major cold storages, incur huge losses due to more production and storage and less realisation of the potato price for the storer.

What impact does Good and Services Tax (GST) on the cold chain industry?
  • Earlier, Annexure 45 for the purchase of  PUF panel was exempted and machinery was withdrawn. As a result, there was an 18 per cent increase in the capital cost of cold chain projects
  • The clarification of the confusion regarding agriculture produce by the GST committee was not enough. While the rate of 18 per cent was very high, this may reduce to five per cent
  • There are additional administrative expenses for the cold chain industry
 
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