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India Cold Chain Opportunity & Challenges 2013

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  • 1. Principal  Advisor  Chief  Advisor  to  
  • 2. Globalisation    Process  Integration.    Bilateral  trade.    Diminishing  world,  singular  demands.    Right-­‐Cost  Country  optimisation.    Business  friendly  Global  Banking.    Borderless  consumer.  
  • 3. Growth  in  initial  areas  extends  parity.  Parity  feeds  demand;  new  consumption.  Demand  outpaces  development.  Lack  of  development  creates  bottlenecks.  Bottlenecks  raise  costs.  High  costs  restricts;  feeds  aspirations.  Aspirations  provide  further  scope.  Enduring  Scope  is  Unending  Opportunity.  
  • 4. Enduring  Scope  is  Unending  Opportunity.  Chain  of  business    Chain  of  transactions.    Chain  of  information.    Chain  of    operations.    Chain  of  processes.    Chain  of  policies.    Chain  of  people.    Value  chain.    Demographics,  National  Priorities,  Sustainability,  Technology,  Information,  Affiliation.  
  • 5. Uneven,  non-­‐holistic  development  of  resources!  Cold-­‐chain  requires  integration  across  total  activity  chain!  Changing  priorities,  impatient  populace  –  short  cuts!  Fear  of  missing  the  bus  –  short  term  strategy  for  long  term  solutions!    
  • 6. " Integrated  infrastructure  development.  " Reverse  haulage  –  capacity  utilisation.  " Market  capture  –  barriers  and  tariffs.  " Training  and  Skilled  deployment.  " Rapid  demo-­‐graphic  changes.  " Changing  global  strategies.  " Technology  adaption.  " Investment  inertia.  
  • 7. FSMA  /  FSSAI  /  Others  Trend  is  to  move  from  post-­‐facto  control  mode  to  first  mile  preventive  mode.  Impacts  independent  development  agendas;  changed  deployment  of  resources.  Benefits  stakeholders  from  early  compliance;  lowered  rejects,  opens  strategic  options.  More  inclusion  among  stakeholders.  
  • 8. Prevent  Controls  Inspect  Compliance  Recall  Response  Partner  Administer  Resource  Labs  Skills  Costs  Fees  Procurement  Onus  Distrust  Sharing  Business  New  markets  New  pricing  
  • 9. " Human  population  of  1.22  billion.  " with  a  GDP  of  USD  1.94  Trillion.  " Post  harvest  value  loss  ~18-­‐40%  of  farm  produce.  " Foreign  Trade  USD  795  billion.  
  • 10. " The  largest  producer  of  milk  (133  million  tonnes).  " Largest  producer  of  mangoes  (15  million  tonnes).  " Largest  producer  of  bananas  (29  million  tonnes).  " Largest   exporter   of   beef   (1.52   million   tons),  largest  buffalo  livestock  (105  million).  " Second  in  fruit  (80  mlllion  tonnes)  and  vegetable  production  (160  million  tonnes).  " Third-­‐largest  producer  of  fish  (8.3  million  tonnes).  " Third   largest   pharmaceutical   producer,   8%   of  global  production.  
  • 11. " not  a  single  perishables  gateway!  " only  ~8000  reefer  trucks.  " limited  reefer  rail  options.  " Containerisation  at  20%.  
  • 12. " Coastline  is  more  than  7,500  km  long.  " Interspersed  with  more  than  200  ports.  " International  cargo:  95%  by  volume    and  75%  by  value  is  carried  by  sea.  " Ports  capacity  1,247  million  tonnes,  doubling  by  2017.  " Railways:   87,087   km,   across   7,083   stations   and  operates  more  than  18,000  trains  every  day.  " 4.2   million   km   Roads   :   National   Highways   -­‐  76,818  km,  State  Highways  -­‐  154,522  km,  District  Roads  -­‐  2,577,396  km,  Rural  Roads  -­‐  1,433,577  km.  
  • 13. " DTR:  (Tmax)  –  (Tmin)  of  20°C    " Shortfall  of  power,  reliance  on  diesel  gensets.  " Insulation  and  energy  efficiency  standards.  " Portability  options  min.  
  • 14. " 4th   largest   electricity   consumer,   fifth   largest  installed  capacity  (246  GW)  with  11.5%  renewable  capacity.  " 300   clear   days,   Solar   radiation   4   to   7   kWh/m2;  area  3.287  million  sqkms.  " Solar  reception  5000  Petawatt-­‐hours  per  year.  " Fifth  largest  in  wind  power;  18,634MW  in  2013.  " Among   lowest   ecological   footprints   of   0.9   gha/person.  " Starkly   different,   tightly   clustered;   six   major  climatic  zones.  
  • 15. 24.0  25.0  26.0  27.0  28.0  29.0  30.0  31.0  32.0  800  900  1000  1100  1200  1300  %  of  total  millions  Urban  population  %   Total  population  million  0.0  0.5  1.0  1.5  2.0  2.5  800  900  1000  1100  1200  1300  %  Growth  millions  Total  population  million   Population  annual  %  change    Indian   Economy:   growing   at  more   than   8%   for   last   decade,  population   growing   @   1.5%  annually  for  last  two  decades.        Continuous  urbanisation  of  India  due  to  expanding  development.    Projections:  on-­‐going  Key  socio-­‐economic  changes  and  four  fold  growth  in  the  size  of  middle  to  rich   class   Indian   households;  resulting   doubling   household  consumptions  by  2020.        Young   populace,   aspirations  overreached   and   to   stay  stretched.  
  • 16. " GDP  USD  1.94  trill  in  2012  from  1.25  trill  in  2006  (+56%  in  6  years).  " Spending   growth:   $991   billion   in   2010   to  $3.6   trillion   by   2020   (5.8%   of   global  consumption,  doubling  from  2.7%).  " 1,870,000  Consumer  Food  outlets  (2012).  Source: Boston Consulting & CII, IRIS, MoSPI- Govt of India.474  593  785  1003  354  444  565  735  FY05   FY07   FY09   FY11  Domestic  spend  (USD  from  ₹)  31-­‐Jan-­‐2012    Per  Capita  Disposable  Income   Per  Capita  Disposable  Spending  >2  x  from  2005  61%  17%  10%  6%  4%  3%  India  Spends  on  Food  and  Grocery  Others  Clothing  and  Fashion  Electronics  Beauty  and  Welness  Furniture  and  Fixtures  Increased  Demand  for  (Cold  Chain)  Quality  Foods  Increase  in  consumer  class  pop.  Purchasing  power,  Rise  in  income    Changed  consumer  mindset  Easy  consumer  credit  Quality  &  Hygiene  consciousness  
  • 17. 17  Within  Horticulture,  perishable  commodities  trends  higher  &  drives  growing  demand  for  perishable  handling.  
  • 18. 18  28.643.050.965.6 68.5 71.574.981.058.588.6101.2128.4129.1134.1146.6155.00  20  40  60  80  100  120  140  160  180  Million  Metric  Tons  Horticulture  Production  Fruits   Vegetables   Plantation  Crops   Others  x  2.6          x  2.8  Others: includes Spices, Loose Flowers, Nuts, Mushroom, Aromatic/medicinal and Honey .Source: Horticulture Division, Ministry of Agriculture and CrossTree AnalysisAgriculture  cultivated  area:  150  million  hectares  •  Area  under  Horticulture:  23  million  hectares  (15%)  $260  billion  to  Indian  GDP  by  Agriculture  •  35%  of  this  is  from  Horticulture.  
  • 19. " Inflationary  trend  (40  years)  shows  Food   as   prime   driver   with  perishables  contributing  highest.  " Despite  producers  showing  robust  response  by  increasing  supply,  yet  inflationary  pressure  exists.    " This  may  indicate  that  demand  for  perishable   products   continues   to  outstrip  supply.  " This   also   indicates   a   lack   of  efficient   supply   systems   which  continues   to   feed   inflation   in   food  items.   1971-­‐72  to  1981-­‐82  1982-­‐83  to  1993-­‐94  1995-­‐96  to  2004-­‐05  2005-­‐06  to  2011-­‐12  All  Commodity   10.2   7.9   5.9   6.6  Primary  Food   8.5   9.2   5.9   9.9  F  &  V   9.0   10.6   7.5   9.2  Milk   7.1   9.0   5.7   10.1  Eggs,  Meat,  Fish   11.0   9.4   6.4   11.8  10.2  7.9  5.9  6.6  8.5  9.2  5.9  9.9  5.5  6.5  7.5  8.5  9.5  10.5  11.5  Inflation  %  Trends  -­‐  Annual  Average  WPI  Inflation    (from  1970  to  2012)  Continual  demand  for  food  distribution  and  cold  chain  is  foreseen  over  coming  decade.    Source: RBI, Office of Economic Adviser, MoCI, Govt of India
  • 20. •  Global  Cold  chain  logis:cs  spend  from  $5.2  billion  in  2008  to  $6.9  billion  in  2012.    •  Growth  in  Asia  outstripped  all  regions.  •  Asia  &  India  conBnue  to    grow  into  a  major  hub  for  Bio-­‐Pharma,  cold  chain  demand  from  the  sector  conBnues  to  rise.  Notes : Figures exclude clinical trials which is separate specialised logistics.Sources: Cold-Chain BioPharma Logistics Sourcebook 2011 & UN Comptrade database, Orkash and CrossTree Analysis2.1   2.5   2.7   3.2  1.5  1.7   1.9  2.3  1.0  1.2  1.5  2.2  0.6  0.6  0.8  1.1  0  2  4  6  8  10  2008   2009   2012e   2015e  BioPharma  Logistics  Spending  (USD  Billion)  North  America   Europe   Asia   Rest  of  World  0   0.5   1   1.5   2   2.5   3  North  America  Europe  Asia  Rest  of  World  Cold  Logistics  Growth  USD  Billion  2012e  2008  $0.6  to  0.8  billion  (33%  Growth)  $1.0  to  1.5  billion  (50%  Growth)  $1.5  to  1.9  billion  (27%  Growth)  $2.1to  2.7billion  (29%  Growth)  Higher-­‐than-­‐average   growth   in   vaccines   &   specialty  pharmaceuticals   and   heightened   regulatory  requirements  continues  to  drive  cold  chain  for  pharma.    3.7   4.9   4.9   6.1   7.2   8.3  10.5  13.5  16.7  11.5  13.4  15.6  18.4  21.5  24.7  28.4  32.4  36.7  0  10  20  30  40  2007   2008   2009   2010   2011   2012F   2013F   2014F   2015F  Indian  Pharmaceutical  USD  Billion  Exports  Total  Cold chain shipment growth by region
  • 21. Note : Total Food Service Outlets is a sum of Standalone , Leisure and Retail outletsSource : Euromonitor, IBEF, IRIS and CrossTree Analysis  India  is  5th  largest  retail  market  worldwide.      1,968,000  Consumer  Food  outlets  by  2015.  Organised  Retail  Market  is  growing  despite  FDI.  This  feeds  demand  for  cold  chain.  Simultaneous  growth  in  the  food  service  sector  accelerates  need  for  the  cold-­‐chain.  0  20  40  60  80  100  120  140  160  0  200  400  600  800  1,000  1,200  1,400  1,600  1,800  2,000  2005   2006   2007   2008   2009   2010   2011   2012E   2013E   2014E   2015E  Food  Service  Outlets  (‘000)  Standalone    (LHS)   Leisure  (RHS)   Retail  (RHS)  27.8   41.4  88.6  396.1  486.4  780.5  0.0  100.0  200.0  300.0  400.0  500.0  600.0  700.0  800.0  2010   2012   2015P  Size  of  Retail  Market  (USD  Billion)  Modern  Retail  Traditional  Food  &  Grocery  Furniture  &  Furnishings  Electronics  Beauty  &  Wellness  Clothing  &  Fashion  Others  99%  77%  96%  88%  89%  90%  Traditional   Modern  
  • 22. Notes: 2009 and 2010 numbers only for NHB and NHM assisted cold storages. Numbers as of Dec 2012Source: NHB, NHM, Directorate of Marketing and Inspection 2009, Orkash & Crosstree Analysis0  5000  10000  15000  20000  25000  30000  35000  0  1000  2000  3000  4000  5000  6000  7000  1955   1960   1965   1970   1975   1979   1986   2004   2007   2009   2010   2011   2012#  (‘000)  tons  Number  Cold  Storage  Availability  Number  of  Cold  Storages  Installed  Capacity  in  000  tons  (Cumulative)  In  the  Last  Decade  1955-1986" As  of  last  recorded  national  level  data  ,  India  has  6488  cold  storage  with  a  cumulative  installed  capacity  of  approximately  30  million  Metric  Tons  .    Key  Trends  •  More  than  25%  of  the  cold  storage  units  (~10  mill  tons)  have  been  built  post  2004.  •  Growth  (CAGR  2004-­‐12  )  :    Numbers  of  Cold  Storage  :  3.57%,  Capacity  :  5.19%.  Growth  in  Transport  capacity  22%  •  Current  short  fall  of  4000  reefer  trucks,  govt  states  another  30+  million  tons  capacity  needed.  The  witnessed  growth  in  the  Cold  Storage  sector  is  accepted  to  only  accelerate  in  the  coming  years  88%  12%  Segments  Storage  Transport  2007-­‐08   2010-­‐11   2014-­‐15  2.1  3.8  6.9  0.2  0.9  1.9  CC  Market  U$  Billion  Storage   Transport  
  • 23. Capacity  mostly  focused  on  single  product  types  –  a  long  learning  curve  established  Minimal  outreach  for  foods  and  pharma  –  localised  operations,  earlier  focus  was  storage.  Chain  approach  to  counter  Irregular  parameters  across  regions  and  within  days.  Fragmented  development  did  not  encourage  holistic  cool  logistics  for  single  source  service.  Refrigerated  systems  need  adaption  to  India  specific  needs  in  design  and  capacity  utilisation.  
  • 24. Capacity  mostly  focused  on  single  product  types  –  a  long  learning  curve  established  Minimal  outreach  for  foods  and  pharma  –  localised  operations,  earlier  focus  was  storage.  Chain  approach  to  counter  Irregular  parameters  across  regions  and  within  days.  Fragmented  development  did  not  encourage  holistic  cool  logistics  for  single  source  service.  Refrigerated  systems  need  adaption  to  India  specific  needs  in  design  and  capacity  utilisation.  
  • 25. Government as‘Catalyst’EncouragesInvestmentsAgri/Foodsidentified asprioritysectorEncouragesholisticdevelopmentNCCD takesshapeLiberalisesMarketingNormsFocus onMarket linksdevelopmentRationalisesTax LawsMove touniform VAT/GSTCreditsGrants &SubsidiesPPP, Grants,NegotiableWarehouseReceiptsLiberalisingFDI Inflow100% FDI infood sectorIncreasing   focus   to   create   enabling   infrastructure   by   govt.   While   this   support   was   earlier  focused  on  static  cold  storages,  recent  developments  have  been  to  include  refrigerated  trucks  including  containers.  NCCD  to  play  pivotal  role  to  correlate  industry  expectations  and  policies.  
  • 26. Subsidies  available  for  constructing  Cold  Chains  by  Govt.  of  India  Capital  Investment  Subsidy  /  RIDF  Scheme  Integrated  Cold  Chain  Scheme  PPP-­‐IAD  NVIUC  Public  Entrepreneur  Guarantee  Scheme   40.9  593.9  1187.5  0  500  1000  1500  Xth  Plan   XIth  Plan   XIIth  Plan  USD  Billion  Outlay  Amounts  for  Infrastructure  Development  (Five  Year  Plans)  Initiatives  for  Infrastructure  Development  • Mega  Food  Parks  Scheme.  • Integrated  Cold  Chain  Scheme.  • State  level  Initiatives.  • National  Horticulture  Board.  • National  Horti  and  FPI  Missions.  NCCD  as  umbrella    agency  to  address  concerns.  
  • 27. Central  Excise  Duty  •  100%  exemption  for  specified  equipments  for  storages  or  transport,  self  loading  /  unloading  trailers  /  semi-­‐trailers.  Customs  Duty  •  Full  exemption  from  basic  customs  duty  for  manufacture  of  refrigerated  vans/trucks;  bio-­‐polymer/bio-­‐plastics;    •  Concessional  duty  of  5%  for  initial  installing  or  expansion  of  a  cold  storage,  cold  room,  processing,  etc.  Service  Tax  Exemption  •  ‘Erection,  Commissioning  or  Installation’  of  Mechanized  Handling  Systems;  Cold  Storage  and  transport;  •  Cold-­‐chain  Service  of  storage  and  transporting  agriculture  produce.  •  Technical  Testing;  Analysis  Service  and  ‘Technical  Inspection  and  Certification  Service’.  Capital  Investment  •  Cold  Chain  &  FDI:  100%  FDI  through  automatic  route.  •  Investment  linked  Tax  deduction  :  150%  of  capital  investment  deductible.  •  Government  subsidy  on  investment:  40  to  55%  subsidy  on  storage  and  transport  
  • 28. " Industry,   PSUs,   Government,   Investors,   Entrepreneurs,   Farming  Associations  &  Knowledge  Houses  -­‐  All  Working  Together!  Executive  Committee  25341Technical  Specification,  Standards,  Test  Laboratory  &  Product  Certification  Committee.  Training,  HRD  and  R&D  Committee.  Committee  for  Application  of  non-­‐Conventional  Energy  Sources  in  Cold  Chain  Infrastructure.  NCCD  Members,  other    Committee  for  Supply  Chain  &  Logistics.  6Liaison  with  other  NLAs  and  States  cold  chain  sectors  
  • 29. Cold  Supply  Chain  (India):  Poised  for  a  Quantum  Jump  " Best  practises  for  Sub-­‐continent  conditions,  market.    " Skill  development  &  training  establishments.  " Appropriate  &  integrated  Infrastructure  development.  " Adoption  of  energy  efficient  technology.  " Partner  with  Indian  logistics  companies.  " Adapting  from  mass  storage  to  direct  access  storage.  " Manage  and  develop  Multiple  markets  in  region.  " Anticipate  ahead  of  a  developing  market.  Here is History in the making and the Opportunity to be part of it. A market develops to oblige!
  • 30. There is a fledgling Cold chain awaiting shape, to serve a billion+ people." Innovators  and  solutions  biased  companies.  " Technology  Provision  and  implementation.  " Cold  Logistics  and  Supply  Chain  services.  " Specialised  Infrastructure  designers  and  planners.  " Expertise  in  alternate  energy,  environmental  protection.  " Scalable,  Energy  efficient  Refrigeration  technology.  " Refrigerated  Vehicles  and  last  mile  delivery  systems.  " Education,  Training  &  Cold  chain  management  experts.  " Knowledge  Managers  and  Integration  specialists.  
  • 31. www.nasa.gov    Earth  Gallery  
  • 32. www.nasa.gov    Earth  Gallery  
  • 33. Nodal  Body  for  Cold-­‐chain  Development  Ministry  of  Agriculture  Contact-­‐NCCD@gov.in