2024 is a year of significance for India considering several important developments that have either already taken place or going to happen soon. Although so far no official date has been declared for the 2024 Lok Sabha Polls, it is expected that the same will be held sometime between April and May this year. South Asia’s largest HVAC&R + Intelligent Building exhibition ACREX India 2024 is also scheduled to happen between February 15 and 17, 2024. A few days back, we have seen the inauguration of the Ayodhya Ram Mandir (temple), which is a mark of excellence of modern Indian building architecture.
The robust, well ventilated, three-storied structure with east-west length of 380 feet, width 250 feet and a height of 161 feet, has been constructed following the traditional Nagara style – on a total of 392 pillars, and it has 44 doors. Following the principle ‘the higher the ceiling the cooler is the floor level, each floor of the temple has been made 20 feet tall. In this design, the side openings ensure that there is no need for air destratification.
Any way, coming back to this magazine’s core area, today I would like to draw your attention on a 2022 report by the International Trade Administration (USA) – and then focus on some recent developments & trends and favourable government policies in our value chain as presented by some market research organisations.
The 2022 report (Food and Agriculture Value Chain) stated, “India is an agrarian economy with half of its labour market representing agriculture-related sectors and more than 54% of the nation’s land categorized as arable. India is among the world’s leaders in terms of production volume for commodities such as rice, wheat, cotton, sugar, horticulture, and dairy. Agriculture and related sectors such as forestry and fisheries account for 20.2% of the country’s GDP.”
Yet the same report highlights that because of inefficient food distribution system and poor infrastructure post-harvest losses go up to 40% for certain products. Obviously, we need to improve our food chain in which cold chain occupies a significant portion. Let us now see the current situation.
Research and Markets’ observation
According to Research and Markets’ latest report, titled the “Cold Chain Market in India, 2024,”The Cold Chain industry in India has witnessed remarkable growth in recent years, driven by an upsurge in demand for temperature-sensitive products across various sectors.”
The report states that the Indian cold chain market has experienced a paradigm shift, propelled by a burgeoning middle class, changing consumer preferences, and an expanding organized retail sector. In terms of revenue, the cold chain market in India was valued at INR 1.86 Trn in 2022 and is expected to reach INR 5.06 Trn by 2028, expanding at a Compound Annual Growth Rate (CAGR) of ~18.25% during the 2023 – 2028 period.
The pharmaceutical and healthcare industry, agriculture and horticulture, processed food, and dairy products are major contributors to the increasing demand for cold chain logistics. With a renewed focus on reducing post-harvest losses, enhancing shelf life, and ensuring product safety, the cold chain has emerged as an indispensable component of the supply chain ecosystem.
Despite significant progress, the cold chain sector in India faces multifaceted challenges, ranging from inadequate infrastructure and technology gaps to regulatory complexities. The lack of a seamless cold chain network across the country poses logistical hurdles, particularly in rural areas. However, recent government initiatives and collaborations between public and private entities are poised to address these challenges and create an environment conducive to sustained growth.
The report has bifurcated the India’s cold chain market into cold chain storage and cold chain logistics. By the end of 2028, the cold chain storage segment is expected to hold a share of around 55.59% of the overall market. Many global cooling and logistics companies are stepping up their operations in the cold chain sector in India eyeing the huge potential in a large agriculture-driven country, which also happens to be the world’s second-largest producer of grains, vegetables, and fruits.
According to these researchers, “The implementation of the GST has streamlined tax structures, positively impacting the cold chain sector. Additionally, advancements in technology, such as real-time tracking and monitoring systems, have improved operational efficiency, ensuring the integrity of temperature-sensitive goods throughout the supply chain. This integration of technology, coupled with a growing awareness of the benefits of cold chain logistics, is fostering a favourable environment for market expansion.”
The Indian government’s ‘Farm to Fork’ initiative and the National Centre for Cold-chain Development (NCCD) have played pivotal roles in promoting investments and fostering innovation within the cold chain sector. The rise of e-commerce platforms and the increasing demand for quick and efficient last-mile delivery solutions further underscore the need for a robust cold chain infrastructure.
Mordor Intelligence’s view
Mordor Intelligence’s recent report, titled, “Cold Chain Logistics India Market Size & Share Analysis – Growth Trends & Forecasts (2024 – 2029),” also predicts a good potential of this industry. According to their report, “The India Cold Chain Logistics Market size is estimated at USD 10.30 billion in 2024, and is expected to reach USD 13.58 billion by 2029, growing at a CAGR of 5.67% during the forecast period (2024-2029).”
It states that the rising demand for perishable goods has been propelling the market growth. Furthermore, due to a shift in consumer behaviour, e-commerce and online shopping of pharmaceuticals are driving the market.
The Indian cold chain industry is still in its infancy, making it one of the most promising fields in the cold chain warehousing and logistics industry. India is on track to become the world’s fifth-largest economy by 2027. As a well-established key player in the global market, investment in India’s supply chain infrastructure is expected to rise year on year. Fortunately, the Indian government is a driving force in developing the cold chain industry, and it encourages private participation through various subsidy schemes and grants. The Ministry of Food Processing Industries (MoFPI) launched a program dedicated to cold chain, value addition, and preservation infrastructure.
India is the world’s largest producer of milk and the second largest producer of fruits and vegetables, and it produces a significant amount of seafood, meat, and poultry. However, due to the inexperienced cold chain supply, food and agricultural products are significantly lost. According to the Food and Agriculture Organization, approximately 1.3 billion tonnes of food are lost yearly, accounting for one-third of total food production. These losses are estimated to be between USD 8 and USD 15 billion annually. To avoid these issues, the cold chain sector must be developed. Aside from perishable food, the pharmaceutical industry is another critical sector that relies on a reliable cold supply chain network. Vaccine storage and transportation, life-saving drugs, and other pharma raw materials are in need of a robust and well-managed cold supply chain network.
Consumer behaviour and purchasing habits have shifted dramatically in the last two years as the world has experienced its worst health crisis in history. There is an increasing demand for digital and home-delivered shopping and a greater understanding of pricing and eco-friendly, healthy, and locally sourced products. India should be encouraged to make better use of its cold chain equipment. The national logistics strategy, which is currently being developed, will address some cold chain challenges and larger-picture issues. The government is assisting logistics parks in a number of locations across the country. Indeed, the Indian government performs admirably in this regard.
The rising demand for processed foods is significantly driving the growth of the perishable goods transportation market, though factors such as food safety may impede the market growth. Breakfast cereals, dairy products, meat, and poultry are examples of processed foods. Meanwhile, the rise in disposable income has influenced people’s spending habits. They have developed a desire to try and experience different food varieties regardless of price. Furthermore, trade liberalization has aided in the transportation of a variety of processed foods, such as tinned vegetables and ready meals, driving demand for perishable goods transportation. Perishable goods transportation will be pushed by rising demand.
Conclusion
Thus, from the two independent market research firm’s observation, the following things are evident: i) the Indian cold chain sector is developing at a reasonably good pace; ii) there is need for updated technologies; iii) manpower in the field must be well-trained to properly use even the existing technologies; and iv) the present government is putting its best effort to support to raise the effectiveness, standard and quality of the country’s food supply chain.
ACREX India 2024 is coming in a few days. Let us use the opportunity to know about the latest global technologies, discuss our challenges with the global experts and explore the ways to improve our Indian cold chain network.
By P. K. Chatterjee (PK)
