India can double storage capacity to over 61 MMTs by 2015-16 with FDIs in food retailing: PHD Chamber

The Indian warehousing industry is mostly dominated by unorganized players, accounting for 85% of the market.

July 21, 2014 3:18 IST | India Infoline News Service
The PHD Chamber of Commerce and Industry on Monday pitched for foreign direct investment (FDI) in organized food retailing, arguing that it can attract hundreds of crores of investments and double its cold storage capacity to over 61 million metric tonnes (MMTs) by 2015-16 from its 2012-13 estimated level of 31 MMTs as also drastically minimize the losses of its agri-produce, currently estimated between 18 to 32%.
In a background paper prepared by the Chamber for its today’s Logistics Conclave-2014, the existing cold storage infrastructure in India numbers at 6,300 cold storage facilities with over 3,500 companies in the value chain.   Cold chain solution provider companies constitute 85% of the market, while transportation services, such as refrigerated trucks (known as reefers), account for the remaining 15%.
The paper which is released here today by the Sr. Vice President, PHD Chamber, Alok B Shriram in the presence of Dinesh Rai, Chairman, Warehousing Development and Regulatory Authority (WDRA) and Dr. Santosh Kumar Sarangi, Chairman-cum-Secretary, APEDA also highlights that the warehousing sector forms a crucial link in the overall logistic value chain and accounts for 25.7% share within the total Indian logistics market. 
The size of the Indian warehousing industry (across commodities and modes) is pegged at about Rs. 560 billion (excluding inventory carrying costs, which amount to another Rs. 4,340 billion).  The industry is growing at over 10% annually.  The Indian warehousing industry is mostly dominated by unorganized players, accounting for 85% of the market.  Modern warehousing (organized players) accounts for only 15% share; nevertheless, this segment is growing at a CAGR of 25-30%, and it expected to account for a 30% share by 2015-16.
The paper concludes that with FDIs in place in organized food retailing, India would be able to enhance its cold chain and distribution infrastructure including warehousing facilities as these are strictly the subjects that fall in States domain and most of India’s States suffer from fund crunch although the India in its current budget has allocated Rs. 5,000 crores for setting up of warehousing facilities.
It has also made its logistics sector quite lucrative by doling out lot of subsidies on it on Central sponsored schemes among others and announcement of FDIs on the food retailing could transform the sector as lot of foreign investors are keen to make proper utilization of this facility through FDI route.

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