How the Indian Government is securing the future of the Agricultural Cold Storage Market in India?


The agriculture sector in India has had consistent growth in production levels over time. This production level hasn't been matched appropriately in terms of food storage, which highlights the Indian Agricultural Cold Storage Industry's existing whitespace. Despite being an agricultural nation, India experiences significant food losses per year that range from INR 90,000 to INR 100,000 as a result of inadequate post-harvest management and a lack of adequate cold storage infrastructure.
The government has been developing numerous programs and giving grants to help, along with special preference to the states that are behind in terms of infrastructure, in an effort to foster development in the agricultural cold storage industry. Here is an overview of all those crucial steps taken by the government to level up the agricultural cold storage market in India.

1. Indian agricultural sector is growing due to favourable climatic and demographic conditions which is creating demand for cold storage facilities in the country

The lucrative climatic conditions and high rural population…

  • India has high proportion of agricultural land (157 Mn hectares) and a diverse agro climate with 20 agro-climatic zones encompassing all 15 major climates of world.
  • India also possess ~60 soil types in world, receives 1,284 mm of rainfall, 48% irrigated agricultural land, 60 agriculture export zones; poises India as a unique opportunity among global peers.
  • 43% of population is directly employed in agriculture while 58% of population is dependent on agriculture as primary source of livelihood.
  • India is the leading producer of milk, sugar, spices and second largest producer of fruits, vegetables, wheat, pulses etc. Agricultural products have contributed ~12% to Indian export basket during FY’17-19.
  • As at November 2019, around 5,000+ Farmer Produce Organizations including 3,200+ FPO registered as Producer companies; with government’s intent to create 10k more by FY’22.
  • With an aim of doubling farmer’s income by 2022, Indian government has been undertaking steps to improve market linkage, capital investments in pre-harvest and cultivation processes, opening up market for private players, dedicated fund for development, providing MSPs on select crops etc.
  • Rise in Agri-tech startups aimed at solving structural problems of direct link to markets, output assessment of produce, access to credit and technological solutions has brought maturity to new age ecosystem.

…are the backbone of surging agricultural output


“During COVID-19, while other sectors of economy registered a decline in economic output, agricultural sector noted a ~2.7% Y-o-Y growth.”

Source: Industry Articles, Ministry of Statistics, Ken Research Analysis

2. Setting up cold storage facilities could aid in development of food processing, packaging industries, coupled with increase in farmer’s income

1. Minimizing Post Harvest Losses

  • ~25% of total post-harvest losses could be reduced by setting up cold storage units.
  • To ensure a streamlined process, cold storage units must be accompanied by cold chain conduit comprising of pack houses for pre-cooling and reefer vehicles for long haul transportation.

2. Increased Marketing Avenues and Better Price Discovery

  • During any year of bumper production, prices at the time of harvest fluctuate heavily and descend every day by 10-25%.
  • Having cold storage units allows the producer to store produce for future use fetching better prices upon sale in other regions.

Components of Cold Chain

3. Ensuring safety of produce and perseveration of quality

  • Cold Storage facilities do not allow bacteria formation, retains humidity and moisture for longer duration.
  • For instance, if potatoes are not stored at 5° to 7° C, shelf reduces from upto 10 months to 3-6 days only.

4. Act as an Enabler to Food Processing and Packaging Sector

  • Cold Storage units are utilized after the crop produce has been graded and packaged as per requirement. Undertaking such packaging and assured supply in non-harvest seasons has contributed to growth of food processing industries immensely.
Source: Industry Articles, Interviews with Primary Respondents, Ken Research Analysis
Note: “Components of Cold Chain” is for indicative purposes only and could differ for different type of crop produce.

3. Indian Government is actively taking initiatives to establish a robust cold chain infrastructure to enhance the farmers’ income by preventing supply chain losses

Parameter Description
FDI 100% FDI allowed via automatic route.
Infrastructure Status Since 2011-12, cold chain has been given infrastructure status.
Viability Gap Funding Up to 40% of the project cost.
Priority Sector Lending Classifying loan to food & agro-based processing units and Cold Chain under agriculture activities for Priority Sector Lending.
Excise Duty Exemption Refrigeration machineries and parts used for installation of cold storage, cold room or refrigerated vehicle, exempt from Excise Duty.
External Commercial Borrowings Cold chain projects eligible for External Commercial Borrowings.
Special Fund Setting up of a Special Fund of USD 271 Mn in National Bank for Agriculture and Rural Development (NABARD) to provide affordable credit for designated Food Parks and agro-processing units.
Incentives for Creation of Infrastructure Incentivizing creation of infrastructure, expansion of Processing Capacity and developing technology to convert raw produce into value added products.
Target of Formation of 10,000 FPOs by 2028 In Feb 2020, PM launched the central sector scheme with an objective of creating & promoting 10,000 FPOs with a total budget outlay of INR 6,865 Cr in 9 years. ~2200 CBOs have been allocated for formation of FPOs for FY’21.
Lower GST for Raw and Processed Products Nearly 80% of food products are covered in lower tax slab of 0%, 5% and 12%.
Sustainable Development Goal India aims to end all forms of malnutrition and achieve target of ‘Zero Hunger’ goal by 2030.
Source: Industry Articles, Report by Savills India, Government Websites and Ken Research Analysis CBO refers to Cluster based Business Organizations, FPOs are Farmer Produce Organizations

4. Multiple schemes are implemented on ground to accelerate investment in the cold storage sector

NHB Schemes

    Cold Storage Assistance:

  • Grants: 35% of Costs
  • Storage Type: Large Cold Chambers with > 250 MT each
  • Cost Norms:
    • ₹7,600/MT for capacity 5001-6500 MT
    • ₹7,200/MT for capacity 6501-8000 MT
    • ₹6,800/MT for capacity 8001-10000 MT
  • Storage Type: Multi-Temperature Chambers with <250 MT each
  • Cost Norms:
    • ₹9,500/MT for capacity 5001-6500 MT
    • ₹9,000/MT for capacity 6501-8000 MT
    • ₹8,500/MT for capacity 8001-10000 MT
  • Reefer Vehicles Assistance:

  • Cost Norms: ₹6 million/9MT unit

Schemes for Registered Exporters

    Component Based Assistance:

    In-Principal Approval (IPA) is mandatory for the following grants. The grants include only 40% of the project eligible costs.

  • Reefer Vehicles: Max. ₹750,000/ vehicle
  • Storage Areas: Max. ₹1 million
  • Handling Systems; Pre-Cooling Facilities; Treatment Facilities and Other Cold Chain Components: Max. ₹2.5 million each
  • Integrated Post-Harvest Handling Systems: Max. ₹7.5 million

MIDH Schemes

  • Grants: 35% of Costs
  • Cost Norms:
    • Integrated Packhouse - ₹5 million per unit
    • Pre-Cooling Unit - ₹2.5 million per unit of 6 MT
    • Cold Room (Staging) - ₹1.5 million per 30 MT
    • Unit Mobile Pre-Cooling Unit - ₹2.5 million per unit
    • Primary Processing Unit - ₹2.5 million per unit
    • Ripening Chambers - ₹100,000/MT | Max. 300MT

Key Takeaways

  • A total of 325 projects (214 completed and 111 on-going) are operational in various parts of India with Maharashtra witnessing highest number of 62 projects in pipeline in the cold storage sector.
  • With a total project outlay of INR 8,893 Cr, government of India has approved a cumulative grant –in aid of INR 2,478 Cr via its various schemes under MOFPI & NHB.
  • These projects are mainly being undertaken in Fruits & Vegetables, Marine, Fisheries, Diary and Irradiation sectors in Tier II/III cities of the country.
  • Release of this type of data as well as positive feedback from new unit operators further emboldens the confidence in govt.
Source: Industry Articles, Government Websites and Ken Research Analysis

5. Government is also offering support to Cold Storage Industry via Capital Investment Subsidy Scheme, Agricultural Marketing Infrastructure Scheme and Role of NCDC

Capital Investment Subsidy Scheme for Horticulture

  • To minimize the post-harvest losses, a capital investment subsidy scheme for construction/expansion/modernization of cold storage and storages for horticulture produce has been introduced.
  • The scheme is implemented by NABARD in collaboration with National Horticulture Board (NHB), Ministry of Agriculture.
  • The eligible organizations for the scheme includes Co-operatives, Companies, Corporations, APMC/Boards, Partnership Firms, Proprietary firms and Agro-Industries Corporation & Growers Association.
  • The objectives of the scheme are:
    • Promote setting up of cold storages in country for reducing post-harvest losses.
    • Creation of 12 lakh tonnes of new cold storages and modernization/rehabilitation of 8 lakh tonnes of existing cold storages.
  • The subsidy calculated as below is subject to a maximum limit of IN 50 lakh per project. But for the projects in the North-Eastern States, maximum subsidy admissible would be INR 60 lakh at the rate of 33.33% of the project cost.
Particulars Scale of Assistance
New Cold Storage/expansion of existing cold storage INR 4,000 per tonne
Modernization/rehabilitation of existing cold storage INR 1,000 per tonne
Storage for horticulture produce like onion INR 2,000 per tonne

Note: For calculating the subsidy, the capacity of cold storage can be decided by providing a volume of 3.4 cum per tonne or 120 cubic feet per tonne of production.

Agricultural Marketing Infrastructure Scheme

  • Agricultural Marketing Infrastructure (AMI), a sub-scheme of Integrated Scheme for Agricultural Marketing (ISAM) was effective from 01st April 2014.
  • The main objectives of the scheme are
    • To develop Agricultural Marketing Infrastructure including storage infrastructure for effectively managing marketable surplus of Agriculture including horticulture and allied sectors including dairy, poultry, fishery, livestock and minor forest produce.
    • To promote creation of scientific storage capacity for storing farm produce, processed farm produce and agricultural inputs etc. to reduce post-harvest and handling losses.
    • To provide infrastructure facilities for grading, standardization and quality certification of agricultural produce and to promote pledge financing and marketing credit, following negotiable warehousing receipt system. It is a credit linked, capital investment back end subsidy Central Sector Sub-scheme.

Role of NCDC

  • NCDC is a non-equity based development financing institution created exclusively for the cooperative sector with the aim and objectives to promote, strengthen and develop farmers’ cooperatives; assist programmes of cooperatives for supply of inputs, processing, storage and marketing of agricultural produce and consumer goods and those dealing with notified commodities and services.
  • During FY’21, An assistance of Rs.16,108.44 crore has been disbursed (as on 31.12.2020) against an approved outlay of Rs.13,400.00 crore for the various programmes implemented by NCDC.
Source: Annual Report of Department of Agriculture, Cooperation & Farmer’s Welfare, Ken Research Analysis

6. The establishment of Mega Parks is expected to provide a boost to processing & cold storage services.

Distribution of Mega Food Parks (Leasable Land in Acre), Sep-2020

List of Completed and On-going Mega Food Park Projects

Completed Projects

  • # of Projects: 19
  • Leasable Area (acres): 607.19
  • Major States:
    • Maharashtra - 3 Mega Food Parks
    • Uttarakhand - Patanjali Food & Herbal Park + 1 other
    • Karnataka – Integrated Food Park + Favorich Infra
    • AP – Srini Food Park, Godavari Mega Aqua Food + 1 other

On-going Projects

  • # of Projects: 18
  • Leasable Area (acres): 625.28
  • Major States:
    • Kerala - KSIDC (Alappuzha), KINFRA (Palakkad)
    • Odisha - IDCO (Khurda), MITS Mega Food Park
    • Punjab – International Mega Food, Agro Industries
    • Haryana – HSIDC (Sonipat), HAFED (Rohtak)
Source: Interviews with Industry Experts, Industry Articles and Ken Research Analysis

7. With support from the government and investors, the Indian Agricultural Cold Storage sector looks attractive in the long run


  • Cold storage units provide aid in getting better prices of crop produce to farmers by providing cooling solutions.
  • Further, storage units near export zones has allowed generated export receipts from domestic crop produce.
  • During 2010-20, it is estimated that establishments of new cold storage units has led to substantial reduction in post harvest losses.
  • Presence of cold storage units has enabled backward integration by food processing firms undertaking massive contract farming of Potato.


  • Lower Community Acceptance: Farmers in India are not very welcoming to private players and generally, follow community/gram panchayat decisions.
  • Limited capacity for multi-purpose commodity storage including Meat, seafood, diary products further impend the growth of industry.
  • High initial cost of ~INR 5 Crores for capacity of 5000 Mt along with potential break-even in 6-7 years generates less interest among foreign players.
  • High Unorganized players with limited business diversification impede the growth of industry.


  • Growth in End-user Industries: India’s food processing, milk processing, food exports & growing logistics sector highlight sound opportunities for capacity expansion + addition.
  • Immense Govt. support: Via multiple programs, govt. has been aiding in development of state of art cold chain components including ripening chambers, reefer trucks, pack-houses etc & providing subsidy of upto 50%.
  • Rising adoption of CA Technology could benefit cold storage operators in states of J&K, HP, Uttarakhand as sufficient room for growth exists.
Source: Ken Research Analysis
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