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India's cold storage leap: Driving food security
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Saturday, 25 October, 2025, 16 : 00 PM [IST]
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Sakshi Jain
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India's agriculture sector, with a GDP of $262 billion, showcases remarkable resilience, being minimally dependent on imports. This achievement is largely credited to agribusiness companies, which have outpaced many other sectors in growth over recent decades. Notably, the agriculture industry has seen a 28 percent increase in total shareholder returns over the past 10 years, a remarkable 17 percent higher than the broader Indian market.
And to maintain this growth, India’s cold chain market plays an important role serving the diverse and constantly growing market, while ensuring perishable goods reach their destinations in the ideal conditions.
Over the past years, the cold storage market has grown to $12Bn with a low market concentration. Playing on all the drivers of its growth this market is expected to reach $20bn by 2029 at an increasing rate of 10%.
At this critical stage of development, where the agriculture industry is substantial, India needs a robust supply chain infrastructure for its cold chains, but there are shifts in trends and other challenges to address.
Bridging India's Yield Gap: The Indian crop yield is lower than the Asian averages. The average yield of fruits and vegetables in India is at 11.3T per hectare as of 2024 compared to 16.2T per hectare in China. This indicates the potential improvement of almost 40-75% with the right interventions. But without major productivity gains, India has a potential risk of falling short of the projected food demand for the year 2025.
India also falls short on the average rice yield, currently 4T per hectare which is 3T lower when compared to China. So, to meet the demand for pulses alone, India needs to import around 15MMT by 2025, positioning the country as a major player in the global pulse trade volumes.
Change in the Consumption Pattern Towards F&V and Pulses: Unlike the consumption patterns of dietary staples like wheat and rice, which correlate linearly with the growth of the GDP, the demand for fruits, vegetables and pulses follows as S-curve with the GDP. India, over the years has seen a notable shift towards a higher protein intake, increasing the consumption of fruits and vegetables and pulses.
India has now entered an important phase where the demand for these foods has projected a growth of 11% showcasing the change in the dietary preferences. This demand highlights the need for productivity and supply chain efficiency for these sectors to meet the consumer needs.
Consolidation of Pack Houses: These facilities collect, sort, grade and pack produce before sending it to the storage units. They maintain the freshness and quality of fruits and vegetables, preventing losses. India currently has 250 houses, but to meet demand, it requires 70,000 to properly handle agriculture produce right after harvest.
Installation of Reefer Trucks: These are specialised vehicles used to transport perishable goods. Their temperatures can be controlled, with IoT devices monitoring temperature and humidity. Given India’s diverse market, for smooth operations at least 62,000 trucks are needed. However, only 10,000 trucks exist in the country.
Cold Storages as Bulk Distribution Hubs: India falls short of 3MT of these storages, keeping billions of perishable goods at stake. These large-scale facilities essentially store agriculture produce, dairy, meat and seafood in bulk, serving as primary units before they are transported to smaller hubs.
Need for Ripening Chambers: These temperature-controlled chambers are used to ripen fruits like papayas, mangoes and bananas. The main objective that they serve is ensuring that these fruits reach the market at the correct stage of ripeness. This country currently needs 8,200 more of these chambers.
Indian Government provides certain subsidies and has launched various policies and investments to enhance the cold chain sector of India:
100% FDI allowance through Automatic Routes: The Indian government allows 100% FDI in the cold chain sector through the Automatic Route, facilitating foreign investments without requiring prior approval. This policy aims to enhance infrastructure in storage, transportation, and distribution of perishable goods.
Concessional Rate of Custom Duty at 5%: Government has reduced the import tax to 5% making the necessary equipment, machinery and technology more affordable for businesses. Lowering the cost of import duties makes it more affordable for businesses to set up or upgrade their facilities.
Reduction in GST for Raw and Processed Foods: Approximately 80% of the food products sit in the lower slabs of 0%, 5% and 12% in GST. These reduce the overall costs making it cost effective for industries which handle larger volumes of these goods, making them economical and adding to their demand.
Government’s Special Fund of $271mn: NABARD is designed specifically to provide easy and low-cost credit to food parks and agro-processing units. The government invested $271mn to develop easy access for the capital needed to build and upgrade cold storage and agro-processing units to reduce waste of perishable goods.
While the Indian cold chains are all geared up for growth, its stance in technological competitiveness is less clear. But India holds an attractive destination for investors seeking to capitalise more untapped markets.
Total global capacity of the refrigerated warehouses was 616Mn3M, but India only has 150Mn3M. India only holds 24% of the global capacity, showing a significant gap compared to the global standards. These shortfalls would lead to bottlenecks in the supply chain and an increase in post-harvest loss affecting food security and the food processing sectors.
However, this gap also presents a major investment opportunity to modernise cold storage infrastructure, aligning India with global standards and driving growth in food processing sectors.
India ranked 4th in terms of per capita availability of Cold Storage in M3 per urban resident. Globally, cold storage averages between 0.09M3 to less than 0.5M3per urban resident positioning India in the four. This indicates India’s constant progress in meeting the urban cold storage needs and offers strong investment opportunities.
India lost approximately $18.5Bn worth. India loses 5-13% of fruits and vegetables post-harvest before they reach customers, amounting to 13 tons wasted. Moreover, 3-7% of other crops like oilseeds and spices are lost due to the poor handling and storage, highlighting the need for better facilities.
India can only accommodate 10% of its plantation products. Only 10% of the plantation products are properly stored, leaving the rest 90% at risk of spoilage and quality degradation. With demand of 35MMT and India being at 32MMT, the gap of 3MMT could lead to fluctuations in supply and unstable, especially in the off seasons.
India truly holds the potential to take over a large market share in this industry reflecting the diverse and large market it has. It is currently at that stage of development where all sectors of its economy are growing. However, many challenges that may come in its way, India is constantly trying to combat all in this journey of exponential growth.
(The author is content writer at Ken Research.
She can be contacted at sakshi@kenresearch.com)
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