India: Huge foreign investment opportunities in cold chain
India is a fast developing country with with the population's disposable
income increasing rapidly. Demand for consumer goods and of course
fresh produce is on the rise, but with this there comes the inevitable
problems - how to get these products to the people who want them.
Estimates place India’s retail market at USD 425 billion (in 2010) and
that it would be the 3rd largest retail market in the world in the next
decade. From this, currently 61% of the spend is on food products.
At
the recent Cool Logistics Conference in Antwerp, Belgium, Pawanexh
Kohli, Principle Advisor at CrossTree techno-visors, outlined the
problems in India's cold chain and opportunities for investment in the
coming years as the country builds up infrastructure and prepares for
the entrance of big retailers. He claims that despite both global and
domestic suppliers coping with this demand by raising their output, the
supply chain is unable to fill the gap and thereby feeds inflationary
trends.
In recent years India had gone through a Green Revolution
and a White revolution (both synonymous for its success in agriculture
and Dairy sector). India is ranked globally in the top 2 for
horticultural products and accounts for 17% of global milk production,
the largest in the world. Yet the country is still not able to export
enough of its surplus and as much as 40% of fresh produce is wasted,
mainly due to lack of satisfactory handling in the supply chain. The
consumer food retail sector is the fastest growing in the country, worth
around 15 billion USD. Food outlets such as McDonalds and Dominoes have
announced plans to double the number of outlets in the coming years.
They too may find constraints due to lack of efficient supply chains to
service their expansion.
At the moment 900 million tons of cargo
is handled in Indian ports and the country has plans afoot to double
this capacity in the next ten years, yet there is not a single dedicated
perishables gateway or fast track corridor for perishable cargoes in
the country. The country’s containerization is said to be only 20% and
the country is adding to its existing 174 inland container handling
depots to build up greater container handing capacity. It is also the
largest exporter of beef in the world, shipping 1.5 million tons mostly
through reefer containers.
Mr Kohli outlines that the supply
chain is currently not coping with the increasing supply volumes and
there will be continual demand for improvement for the next decade.
There has been a lot of investment in cold storage but not much in much
needed transportation between growers, storage and customers. There are
only four major manufacturers of reefer truck bodies in India and it can
take between 90-120 days to get a complete reefer truck on the road. At
the moment it takes a truck 6 days to travel the 2219km from Dehli to
Bangalore, the average truck speed on Indian roads is 30 kms/hour and
drivers also have to cope with frequent bottlenecks.
Pawanexh
Kohli, who is also Chief Advisor to the govt’s national centre for cold
chain development, stated that India is a rapidly developing nation of a
billion plus, who aspire greater quality and choice; that any modern
cold chain that is developed today in this sub-continent, will bear
fruits for the long foreseeable future. He said that India it is the
time and place where magic can happen! From a country of traders, India
is fast converting into a consumption mecca, and the supply chain has to
ramp up to feed this demand – and the cold supply chain is needed the
most acutely. While the nation may hotly debate the other FDI policy on
multi-brand retail, the cold chain is already opened to foreign
investors.
There are huge opportunities for foreign investment in
the country. The majority of India’s 1.2 billion population is agrarian
and the country needs to ensure that their production does not go waste
and returns fair value to producers and consumers. Capt. Kohli says to
achieve this, “there is no alternative to an efficient and integrated
cold chain, and India can no longer afford to wait”. This fact is
recognized by the Indian government and it has already permitted 100%
foreign direct investment in the cold chain. Stakeholders are further
provided hefty subsidies and grants. These range from 30% to 75% of the
capital spend on developing a cold chain as well as various other tax
benefits.
For more information:
Pawanexh Kohli
CrossTree techno-visors
Tel: +91 9990399638
Email: pxkohli@crosstree.info
www.crosstree.info
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