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Cold storage-Future scenario
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Saturday, 01 October, 2022, 08 : 00 AM [IST]
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Pavan Kumar V
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The advanced technology in cold chain storage is making its space in India. Cold chain storage which is widely used in different industries such as food and beverages, healthcare and pharma, hospitality, is witnessing a huge surge in demand in the Indian market.
Along with these industries, the agriculture sector is also observing similar demand. A few years back, Indian agriculture entered the third revolution: the ‘cool’ revolution to build an efficient market through a sustainable cold chain. Also, Government of India recently approved cold chain projects. As a result, with continued government assistance, new players have entered India, necessitating the creation of a platform where the latest know-how, equipment, and infrastructural facilities can be seen.
Recently, the cold chain industry in India had geared itself up to meet the demands of the Covid-19 vaccine distribution as the government works to establish an effective logistical network to ensure smooth delivery to more than 1.3 billion people. According to the JLL data, India's cold chain sector is expected to grow at over 20 percent CAGR by 2025. In India, this segment has observed limited infrastructure investments due to a fragmented distribution approach, low compliance, and a lack of awareness in handling perishables. There is an urgent requirement to create the right awareness and meet the changing consumption patterns of the consumers.
With efficient and effective cold chain storage, the transportation and warehousing of temperature-sensitive products from the point of origin to the point of consumption, increase shelf life and prevents spoilage. Various industry players are stepping in to form an aggressive and smooth cold chain storage system that can comply with the requirements.
Ways to meet the need of a cold chains demand in India:
1. An organised regulatory framework is needed to reduce or minimise the roadblocks and allow smoother business within the cold chain sector.
2. There's a requirement for a business model for the cold chain industry in India which will be applied at the local level which can make sure the involvement of the farmers.
3. Industry should accompany cost-effective solutions for temperature-controlled storage spaces and transportation because the initial investment required within the cold chain sector is large.
4.Technologies such as Artificial Intelligence (AI) and Internet of Things (IoT) is paving their way in cold chain storage optimising the products effectively and helping in a reduction in wastage.
5. Temperature monitoring devices are being developed which will help in detecting temperature, humidity, or pressure.
6. Alongside, having a strong cold chain infrastructure with effective policy support and implementation strategy can go an extended way in unprecedented times.
Overall, the cold chain capacity in India will still grow aggressively to succeed in 40.7 million metric tonnes of total perishables by 2023, rising 8.2% from 2020, consistent with a Colliers report. With an uneven spread across the country, India has over 6,500 cold storage facilities with an installed capacity of 30 million tonnes. The segment is predicted to become more organised and attract more institutional funds.
It is conjectured that a lot of large domestic and foreign companies are going to be joining the league in the coming years to cater to the growing demand for cold chain logistics. This may also inject required investment and the latest technologies within the Indian cold chain industry in near future.
Additionally, the cold chain industry in India is expected to witness some major mergers and acquisitions by large companies to determine their base and to expand their reach. The staggering growth in the pharma sector, however, will also further drive the demand for strong cold supply chain infrastructure.
Key opportunities and recent developments:
The warehousing and logistics sector in India is projected to attract an investment amount of nearly Rs 691 billion over the next 4-5 years, after the implementation of the Goods & Services Act and the attainment of its infrastructure status. The warehousing sector in the country has witnessed extensive participation from developers, as well as institutional investors, who have invested more than Rs 470 billion since 2014 till May 2019, with an average investment of Rs 19 billion per deal.
The growth in the warehousing market in India is also largely being driven by the rise in international business. Entry of numerous foreign as well as domestic industries in the country and establishment of manufacturing plants have generated greater export opportunities, which in turn has fueled the demand for warehousing spaces across the country.
Impact of Covid-19
The pandemic has caused great disruption in the supply chain. Although warehousing services are covered under the ambit of essentials, erratic flow of materials took the warehouses through a tough time in capacity management. Cold Chain industry of India holds a huge responsibility to deal with this situation. They are shouldering the responsibilities of storing, preserving and delivering the essential commodities. States have incurred many losses during the lockdown. But with the government’s measures to ease the situation, the industry has witnessed some improvement.
India Cold Storage Market
The country is dominated by a large number of small and medium-sized cold storage units located near farms, seaports, airports, pharmaceutical hubs and food processing clusters. India’s cold storage market is dominated by a large number of small unorganised firms which have accounted for a percentage of the overall revenue of the cold storage market in 2017 whereas the organised players have gathered some percentage of the market in 2017.
Small warehouses with a capacity of fewer than 1,000 pallets have accounted for a percentage of the cold storage in India in FY’2017. The medium-sized cold storages with a pallet size of 1,000 to 5,000 have captured a percentage of the market and the large scold storages have gathered momentum.
Future Potential: With the shift in focus from increasing the production to better storage and transportation facility of the commodity, the cold storage market in India is projected to reach billions by 2022.
(The author is associate professor, Seven Hills College of Pharmacy -Autonomous, Tirupati)
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