Colliers forecasts the Indian cold chain sector is expected to grow at 14% CAGR during subsequent three years pushed by progress of online grocery, pharmaceutical sales and the continued Covid-19 vaccination drive within the nation.
“Cold store facilities today are an emerging asset class in India. Lack of organized/efficient supply chain across the country currently leads to wastage of agricultural produce, and the government has been keen on curbing the same. Increased focus on developing organized cold storage infrastructure would enable lowering this wastage by shelf-life improvement of the stored produce. There is a clear opportunity for organized development in this segment as the current infrastructure is primarily fragmented and undersupplied”, mentioned Shyam Arumugam, Managing Director, Industrial & Logistics Services at Colliers India.
Over the subsequent three years, the cold storage phase is expected to change into extra organized, with elevated curiosity from third occasion logistics suppliers and institutional funds.
The cold storage market in India is fragmented and unorganized with services being largely setup on an ad-hoc foundation. India has about 8,200 cold storage services as of 2020, 75% of that are appropriate just for storing single commodities, primarily potatoes, one of many main crops in India when it comes to manufacturing and consumption. The surge in on-line grocery, processed meals and prescription drugs gross sales have opened up ample alternatives for builders and third-party logistics gamers to develop multi-purpose cold chain services in India.
As per the report the cold storages provide an immense alternative for builders and institutional funds to develop multi-commodity cold storages, providing storage services for a variety of sectors together with higher-value commodities. Cold storage services are massively capital intensive, however can fetch gross yields of about 12%, with a break-even interval of 9 years and better rental premium of about 3-4 occasions that of conventional warehouses.
Siddhart Goel, Senior Director & Head, Research at Colliers India, additional added, “While the government reforms have been received positively by private players, aspects such as providing uninterrupted power, recognizing the need for cold storage for non-horticulture products, with accompanying product-specific regulations, introducing single-window clearances for government approvals, and developing infrastructure interlinkages between storage and delivery will further enthuse the private sector and help develop an important real estate asset class that can provide good returns to developers and investors.”
Currently, most services are positioned close to manufacturing factors. Occupiers can discover smaller cold storage services of about 10,000 sq ft– 50,000 sq ft, nearer to distribution facilities, however in peripheral areas of Tier I cities, for environment friendly last-mile supply.
Over the final eleven years, the federal government has initiated insurance policies comparable to profit-linked tax deduction, permitting FDI and different monetary help, to help built-in cold chain administration and encourage the personal sector to develop services.