1

Comprehensive Note on Creation and Management of Cold Chain Infrastructure for Agriculture & Allied Sectors

1. Availability of Cold Storages Cold Storage development in India from the year 2004 to 2012 is shown in

table given below.

Year

No. of Cold

Storages

Installed Capacity In lakh MT

(Cumulative)

Previous Years

2607 54.02

2004 4748 195.52

2007 5316 233.34

2009 5381 244.50*

2010 5837 269.03@

2011 6156 286.82@

2012# 6307 301.10 Source: * Directorate of Marketing and Inspection upto 2009 @ includes only NHB and NHM assisted cold storages during 2009-10 and 2010-11 # As on 01.09.2012

Of the 300.05 lakh MT cold storage capacity, nearly 140.00 lakh MT has

been created between 2000 – 2011 on account of interventions by National Horticulture Board (NHB), National Horticulture Mission (NHM), Horticulture

Mission on North East and Himalayan States (HMNEH), Agricultural and Processed Food Products Export Development and Authority (APEDA), Ministry of

Food Processing Industries (MoFPI) and Department of Animal Husbandry and fisheries (DAHD).

Agency wise details of Cold Storages/CA/MA Infrastructure created (2009-12)*

Name of Scheme

Number of New Cold Storages/CA/MA

infrastructure

Capacity created ( lakh MT)

Govt. Subsidy (Rs. in crore)

NHM 4,51 24.35 3,25.91

NHB 5,28 28.28 1,64.08

HMNEH 9 0.41 7.35

NCDC 5 0.22 3.19

MoFPI 49 2.32 1,46.71

APEDA 24 0.02 12.09

Total 1,066 55.60 6,59.33

*up to 31.03.2012

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2. Requirement scenario

National Spot Exchange (NSE) undertook a study in December, 2010. The

gap in cold storage capacity in various states has been estimated as under:

State Cold Storage

Requirement in lakh MT

Present

Capacity in lakh MT

Gap in lakh

MT

Andhra Pradesh 23.24 9.01 14.23

Assam 9.19 0.88 8.31

Bihar 42.41 11.47 30.94

Chhattisgarh 5.43 3.42 2.01

Gujarat 27.48 12.67 14.81

Haryana 8.04 3.93 4.11

Himachal Pradesh 4.87 0.20 4.67

Jammu & Kashmir 7.37 0.43 6.94

Jharkhand 7.96 1.70 6.26

Karnataka 24.04 4.07 19.97

Kerala 27.71 0.58 27.13

Maharashtra 62.73 5.47 57.26

Manipur 0.80 0.00 0.80

Meghalaya 2.39 0.03 2.36

Mizoram 0.74 0.00 0.74

Madhya Pradesh 12.13 8.08 4.05

Nagaland 0.70 0.06 0.64

Orissa 18.35 2.91 15.44

Punjab 13.18 13.45 0.00

Rajasthan 3.91 3.24 0.67

Tamil Nadu 79.06 2.39 76.67

Tripura 1.63 0.30 1.33

UP & Uttaranchal 122.28 101.87 20.41

West Bengal 105.66 56.82 48.84

Total 611.30 242.98 368.32 Source: NSE& DMI (Present Capacity in Delhi- 126158 MT, Goa -7705 MT, A & N- 210 MT. Pondicherry-85MT)

In 2010, the cold storage gap of about 370 lakh MT was worked out on the basis

of peak season production and highest arrival/ harvesting of storable fruits and

vegetables in a month. Against this, normally 50%capacity is required for storable surplus of the identified fruits and vegetables. The growth of production

of fruits and vegetables is at Annexure – I

3. Post Harvest Losses

As per reports of the Task Force on Development of Cold Chain in India, set up by the Ministry of Agriculture (August, 2008), Planning Commission (XIth plan

working Group on horticulture) and All India Coordinated Research Project on Post Harvest Losses, CIPHET, Ludhiana (April, 2010) post harvest losses continue

to be in the range of 18% - 40% in several commodities (Annexure - IA). As such, a robust cold chain, transport and logistics infrastructure is required.

3

4. Recent Government initiatives

i. Enhanced Pattern of Assistance:

Subsidy has been enhanced from 25% to 40% in General Area and from 33.33% to 55% in Hilly and scheduled area, to attract more

entrepreneurs and private investment in Cold Chain Infrastructure Sector since April, 2010.

ii. Rural Infrastructure Development Fund (RIDF) for warehousing

Finance Minister in his budget speech for 2012-13 has proposed to

earmark Rs. 5,000 crore for creating warehousing facilities (including cold storages) from the allocation under RIDF. During 2011-12, there

was provision of Rs. 2,000 crore under RIDF VII for the first time.

NABARD has informed that as against the allocation of Rs. 2000 crore.

NABARD sanctioned an amount of Rs. 2252.90 crore during 2011 – 12. Of this Rs. 1493.82 crore was sanctioned to 13 state Governments/UTs,

while the remaining amount of Rs. 759.08 crore was sanctioned and disbursed to banks as refinance. Assistance from NABARD is likely to

create a storage capacity of 7.30 million metric tons. Keeping in view the shortage of warehousing infrastructure (including cold storage) for

agricultural commodities, GOI has increased the allocation for 2012-13 to Rs. 5000.00 crore from a level of Rs. 2000.00 crore in 2011 – 12.

Sanction details are at Annexure – II

The interest rate regime governing RIDF has undergone a change w. e.

f. 01 April, 2012. NABARD is in the process of finalizing the policy for the year 2012 – 13, in consultation with Department of Financial Services,

Ministry of Finance, Government of India.

iii. Exemption on Excise and Custom Duty

Custom Duty - The projects of cold storages, cold room (including farm

level pre-cooling) or industrial projects for preservation, storage or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic

and marine produce and meat have been granted project import status with concessional Basic Customs Duty (BCD) of 5%. The Truck

refrigeration units and Refrigeration motor vehicle have been fully

exempted from BCD. - Annexure – III.

Excise Duty - The Central Excise duty has been fully exempted for installation of a cold storage cold room or refrigerated vehicle, for the

preservation, storage, transport or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat, air

conditioning equipment and refrigeration panels for cold chain

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infrastructure and including conveyor belts used in cold storages,

mandis and warehouse. – Annexure – IV.

Service Tax - The Central Board of Excise and Customs have clarified that sub-clause (v) of Section 66D of the Finance Act, which specifies

the Negative List of services and where the services by way of storage and warehousing of agricultural produce are covered. The expression

“Agricultural Produce” has been defined in Section 65(B)(5) of the said Act. Thus storage and warehousing of agricultural produce is not liable

to service tax. Moreover, serial No. 14 of the Mega Exemption 25/2012-ST, dated June 06, 2012 has exempted the construction of post –

harvest storage infrastructure for agricultural produce, including cold storage for such purposes. – Annexure – V.

iv. External Commercial Borrowing (ECB)

External Commercial Borrowing (ECB) can be raised for investments in

new projects, modernization/expansion of existing production units in real sector – industrial sector including infrastructure sector for creating

cold storages or cold room facility, including farm level pre-cooling, for

preservation or storage of agricultural/horticultural and allied produce. Annexure – VI

v. Foreign Direct Investment (FDI)

100% Foreign Direct Investment (FDI) is allowed under automatic route

in storage and warehousing including warehousing of agriculture products with refrigeration i. e. cold storages. Annexure – VII

vi. National Mission on Food Processing

In order to have a better outreach and to provide more flexibility to suit

local needs of fruits and vegetables, it has been decided that a new centrally sponsored scheme titled “National Mission on Food Processing”

would be started, in cooperation with the State Governments in 2012-13

under which cold storage for processing purposes will also be developed. This mission will be implemented by MoFPI as a centrally sponsored

scheme.

vii. Introduction of Horti Train

Introduction of dedicated train and reefer van is also expected to bridge the gap between the producers and consumers thereby ensuring

remunerative prices to the farmers.

The first Horticulture Train, nonstop trail run was conducted between Bhusawal – Azadpur (New Delhi) sector in the month of January, 2012

5

which carried about 1100 MT of banana from Bhusawal to Azadpur

market yard in 26 hours.

Another round of Train run with potato was successfully conducted between Agra – Turbhe (New Bombay) sector on 12th June, 2012. The

Train reached its destination in a record time with extremely good condition of produce at APMC Turbhe, Vasi Market.

Another round of trail run of full rake load of onion from Khedwadi

(Niphad, Distt. Nashik) to Chitpur, Kolkatta (West Bengal) was done in June, 2012.

After conducting trial run on various sectors and with different

commodities, service of Horticulture Train is proposed to be formally launched on viable origin – destination (OD) pairs; i. e. is Agra – Turbhe

– Tulgalabad/Azadpur – Agra.

viii. Technical Standards Notification

Following Technical Standards for storing fresh fruits & vegetables had

been notified for implementation w.e.f.1.4.2010.

a. Fresh Horticulture produce Not requiring pre-cooling before storage (Technical standards number NHB-CS-Type 01-2010)

b. Fresh Horticulture produce requiring pre-cooling before storage (Technical standards number NHB-CS-Type 02-2010)

c. Control Atmosphere (CA) Cold Storage (Technical Standards Number NHB-CS-Type 03-2010)

d. Fruit Ripening Units (Technical standards number NHB-CS-Type 04-2010)

ix. Negotiable Warehouse receipt system in Cold Storages Warehouse for horticulture crops

The Warehousing Development and Regulatory Authority (WDRA), a

statutory body, in consultation with NHM, Department of Agriculture & Cooperation has introduced, in June 2012, negotiable warehouse receipt

system in cold storage warehouses for the major horticulture produce so that the farmers producing horticulture crops may also avail the benefit of

loan from the banks against the deposit of their produce in the registered warehouses (cold storages). This will help in commercialization, effective

post-harvest management and integrated development of agriculture including horticulture in the country. The WDRA has notified 26 horticulture

commodities for the issuance of NWRs by the registered warehouses (cold storages). The WDRA has also finalised the checklist for accreditation of

warehouses (cold storage). The Authority has also approved following 5

Government organisations as accreditation agencies for the cold storage warehouses.

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1. National Institute of Agricultural Marketing (NIAM) 2. Directorate of Marketing and Inspection

3. National Cooperative Development Corporation (NCDC) 4. National Productivity Council (NPC)

5. The Rail India Technical and Engineering Services (RITES) Ltd.

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Executive Summary of Dr. Saumitra Choudhuri Committee report for

encouraging Investment in Supply Chains including provision for Cold Storages for efficient distribution of Farm Products.

1. General

1.1 The domestic and export demand for Horticultural Produce and other

perishable items produce by the Animal Husbandry and Fisheries sector has increased rapidly over the past two decades. This is

significantly higher than the demand for cereals.

1.2 The supply-side response to this increased demand has been fairly

robust and the production has increased both on account of extension, that is, more and more farmers taking up this activity and also on

account of higher yields due to adoption of modern technology. This has also been facilitated by improved road and telecom connectivity

across the country.

1.3 In 2011/12 production of fruits and vegetables was 2.7 and 2.6 times

that of the output level two decades ago, i.e. in 1991/92. This

expansion was much higher than that for cereals, where the 2011/12 output level was 1.5 times that of 1991-92. A similar and more

marked difference may be seen in the most recent past decade (2001/02 to 2011/12) where output of fruits and vegetables has

increased by 80 and 69 per cent respectively over 2001/02, while output of cereals has grown by 17 per cent in the same period.

1.4 Horticulture, animal husbandry and fisheries are particularly accessible to small and marginal farmers who have less land, but also more

family labour.

1.5 Various schemes of the Central and the State Governments have been

very useful in helping farmers gain access to affordable technologies and skills through subsidy and loans.

1.6 There is a clear need to continue and strengthen these efforts to increase the coverage of such activities as also to continually increase

the yield of land, water and nutrients.

1.7 There is considerable wastage and spoilage in fresh produce as also

sharp variation in prices during the season.

1.8 The rate of increase in the prices of fruit and vegetables have been higher than that for cereals especially in recent years, and is a major

contributor to the sharp increase in the inflation level for primary food. Inflation in primary food has been greater than that of manufactured

products and appears to be a driving force behind the higher inflationary pressure.

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1.9 The proportionately higher increase in the prices of horticultural

produce and other perishable farm items, suggest that (a) there is excess demand in the domestic market and (b) their higher output

levels will indeed be absorbed by domestic consumption demand.

1.10 This clearly justifies energetic efforts to encourage the continued

expansion of horticulture, animal husbandry and fisheries, in order to service increasing domestic demand.

1.11 The data shows that for fruit and vegetables, the price at the first point of sale in large mandis as a proportion to the final retail price, is

in the range of 25 to 40 per cent. This proportion may be lower, if smaller mandis were to be considered. The farm gate price is likely to

be lower still, because it is the aggregator who for the most part brings the produce to the mandis and there lies the matter of his

expenses, margin and wastage.

1.12 The inference is that (a) the benefits of demand expansion is not

passing adequately to the farmer and (b) the benefits of higher

production and productivity is not passing adequately to the consumer. All the evidence suggests that this is on account of the large

deficiencies in the logistics system in between the farm to the final consumer.

1.13 The push to build up storage capacity through cold chains has not been successful in vegetables and is limited for fruits. This seems to

have been because the revenue or business model for cold storage on rental basis is not workable for cold chains in horticultural produce

under the present institutional set up.

1.14 The inefficiency in the logistic system appears to stem from (a)

Physical inadequacies: Multiple handling of produce, inadequate cold chains leads to high wastage and bunched-up supply. (b) The

inadequacy in cold chains fails to smoothen out the supply which is seasonal in relation to the demand which is constant and results in

regular episodes of scarcity and glut conditions. (c) Institutional

shortcomings flowing from the way in which APMC legislation has perpetuated a pre-modem framework with uncompetitive and non-

transparent markets, in which commission agents do not have any incentive to change their age old method of operation. It must be

noted that commission agents not only draw sustenance from the “closed shop” flowing out of licenses but also function as financers by

providing credit to their buyers and ready cash to farmers. Thus, the principal role of the commission agent is of a financier-intermediary.

(d) lack of adequate processing facilities which may help to increase the shelf life of the produce with complementary cold chains for the

raw material as well as the finished produce.

1.15 The Committee is of the view that it is possible to visualize a sea

change in the agricultural supply chain by way of a strategy that

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involves four points of intervention, namely: (1) Agents; (2) Market

linkages (3) Institutional change and (4) Financing & incentives.

2. Economic Agents

Two kinds of agents are envisaged. The first is co-operatives of

farmers or producer companies established by growers and the second is private investors. It is desirable that both channels namely,

cooperatives/producer companies and private sector enterprises have equal opportunity to build up the cold chain infrastructure. In the private sector, it

is generally felt that large outside companies may hesitate to actually invest in such facilities, but commission agents may participate.

3. Revenue or Business Model

3.1 A rental model has a high risk emanating from uncertainties about

demand for rental space. The investor is not necessarily in a position

to interact with the downstream market, where the demand for such rentals can emanate. However, there are cold chain projects based on

rental models also and therefore, policies should be designed to support both models of cold storages viz. rental and price-arbitrage.

3.2 The desired outcome in this instance must be in terms of market development and fairness to all stakeholders.

3.3 The only way to reduce the business risk of finding the rental space, is to link the investors in the cold storage, be it an outside investor or a

commission agent or a joint venture between such entities, to an anchor customer who can come forward to take 50 to 75 or even

100 per cent of the available rental space. It is obvious that this anchor customer can only be a large downstream marketer and is

most likely to be a large modem retailer or a food processing unit.

4. Negotiable Warehouse Receipts

4.1 The Warehousing Development and Regulatory Authority can

play an important role by interfacing with cold chain networks so that farmers can either sell for ready cash at the electronic exchange

market price or obtain Negotiable Warehouse Receipts, which they can use to secure financing from the banking system. This will increase

the financial flexibility of farmers who are presently compelled to sell for ready cash at a subdued price.

4.2 The price discovery mechanism must be reinforced by creating electronic exchanges so that at each of these cold chains there is a

clearer picture about what the relevant prices are.

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5. Market Linkages & Direct marketing

5.1 The fact is that most farmers do not have the time or resources to

bring their produce on a regular basis to the market place. Therefore, if the farmers have to gain meaningful access on this parallel chain of

supply, there has to be an opportunity for the farmer to directly market their produce to the cold chain. One way certainly is the

establishment of producer companies/ co-operatives. The other would be to allow private companies to undertake these transactions.

However, in both cases certain institutional changes are required, which is taken up subsequently.

5.2 Market Linkages: The linkage to modem retail or food processing sector via the anchor customers for cold chain is indeed the most

powerful means of creating a fair and equitable market where farmers obtain a good price and the consumers do not have to pay an

excessively high price. Even if this mode of transaction accounts for

only a fraction of the total, it has the potential of setting prices across-the-board.

5.3 Alongside this, in the cities there has to be a plan to modernize markets for fresh produce, so that small retailers are also able to

enjoy the advantage of scale, efficiency and more transparent markets with wide access to information. In this connection, private and co-

operative wholesale markets wherever possible, must be encouraged.

6. Institutional Changes

6.1 The most important change that is required in the institutional set up is to liberate perishable farm produce from the restrictions of the

APMC. The best way to do this is for State Governments to remove “perishable farm produce” form the aegis of the APMC.

6.2 There have been many references to the Model APMC Act. However, it appears that the Model Act has many of the infirmities in the original

APMC Act and is not helpful in developing a framework to modernize the farm logistics for perishable produce.

6.3 Several high powered committees have recommended changes that are consistent with what is being suggested here. State governments

should remove “perishable farm produce” from the coverage of the

APMC acts. This it is understood can be done by amending the schedule. Some of the committees have suggested that a

compensatory mechanism be worked out for the fees that would be lost to the APMC markets. They have also suggested a ceiling of 2 per

cent as fees. This seems to be a matter that can readily yield to a satisfactory resolution.

6.4 If such steps are taken, it will be advisable to put in place a regulatory and reporting authority which can create a simple framework for the

operation of a cold chain. That would include onetime registration,

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depositing of fees and a requirement to submit periodic returns on an

annual or semi-annual basis.

6.5 It is advisable that such a regulatory agency work closely with the

Warehouse Development and Regulatory Authority and other existing regulatory agencies so as to both minimize the creation of a new large

and unwieldy set-up and to take advantages of economies of scale through regular exchange of information – especially in regard of

transactions, price, volume and identity.

7. Financing and Incentives

7.1 Cold chains have received some amount of financial support in the

form of subsidies. The two recent high powered committees have suggested that (a) the cold chain supply system for horticulture and

other fresh farm produce should be treated as infrastructure and (b) that they should qualify for the corresponding financing and tax

incentives. This Committee endorses this view.

7.2 Both the Committee of State Agricultural Marketing Ministers as well

as the Working Group of Consumer Affairs have recommended that the Public Private Partnership (PPP) model with Viability Gap Funding is an

appropriate device to catalyze large scale investments in cold chain.

However since every cold chain project is in many ways unique it may be difficult to structure a competitive bid. This aspect needs further

detailed study so that at least one cold chain project is taken up for viability gap funding. From this experience a firm conclusion can be

drawn on how to proceed further in this matter.

7.3 In continuation of the above paragraph, the Committee would like to

endorse the suggestion of a Viability Gap Funding model for PPP investments in this area. However, it would be necessary to work out

the details involved. In the interim, the catalysis of investment in cold chains would have to depend on capital grants and some access to a

slightly concessional line of finance. NABARD has a line of finance for this purpose and this should be fully used.

7.4 There have been suggestions made by the two committees referred to previously to encourage FDI in this sector. Though FDI is permitted in

cold-chains to the extent of 100%, through automatic route, for

various reasons, inflows have not been significant. There is a need to encourage actual inflows which can be a powerful vehicle of bringing in

both capital and logistics technology and expertise.

7.5 The Union Budget 2012-13 has announced earmarking Rs.5000 crore

out of the Rural Infrastructural Development Fund (RIDF) for creation of warehousing facilities. It is understood that there are some

operational difficulties for utilizing this fund due to lack of clarity. There is a need for clear guidelines for utilization of this fund

particularly in the context of other schemes for promoting cold storage facility.

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7.6 Instead of a straight jacketed approach for encouraging cold chains, a

matrix approach may be considered keeping in view the requirements of different types of horticultural products with varying cold storage

requirements and markets relating thereto.

Recommendations of Dr. Saumitra Chaudhuri Committee Report

1.1 Visualizing and encouraging both farmer co-operatives/producer

companies and private enterprises to establish the cold chain network. Private enterprise would include all manner of outside investors – from

standalone investors to processing companies and retail chains. The policy would actively encourage existing commission agents to set up

cold chain facilities. FDI in cold chain must be encouraged

1.2 The business model of the cold chain system would expressly not be

pure price arbitrage. The objective should be to help smoothen out the episodic and concentrated arrival that is characteristic of the

combination of a seasonal output and regular demand in the retail

market. The result must be to ensure that the farmer receives a good price especially at the peak of the season, and that the consumers buy

at a steady price. The return on investment in this cold chain system should be on a cost-plus basis, not on a price arbitrage model.

1.3 Reduction of wastage, rationalization of margins and larger volumes would generate the economies to sustain the revenue model of the

cold chain system.

1.4 It is necessary to reduce the business risk involved in investing in a

cold chain system and that can only be achieved by providing a dynamic linkage of the cold chain system to the final retail market.

This can be achieved by the tie-up between an anchor customer and the investor provider of the cold chain rental space.

1.5 There must also be framework for direct marketing linking the farmer to the cold chain.

1.6 The Warehousing Development and Regulatory Authority can be

brought in to link up the cold chains into a network and create conditions where the farmer can obtain Negotiable Warehouse

Receipts that can raise funds from the banks, thereby gaining financial flexibility.

1.7 This would need changes in the way APMC legislation works. It is felt that the best way to achieve it would be remove perishable

agricultural produce from the aegis of the APMC acts. Famers must be given freedom to sell directly to food processing companies,

aggregators and retailers in addition to selling in mandis.

1.8 The cold chain supply system for horticulture and other fresh farm

produce should be treated as infrastructure and they should qualify for the corresponding financing and tax incentives.

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1.9 There is a need for simplification of the clearances and licenses

required for setting up of cold storages.

1.10 The committee recommends the Public Private Partnership (PPP)

model with Viability Gap Funding as an appropriate device to catalyze large scale investments in cold chain. However, the details will have to

be worked out. In the interim, investment in cold chains would have to depend on capital grants and some access to a concessional line of

finance.

1.11 The Ministry of Food Processing Industries operates a scheme for

capital subsidy of supporting cold chains. This should be a scheme that is on-tap with clearly set out budget limits so that eligible projects

within the budgeted limit get the required support. The scheme of subsidy support may be reworked/and sufficient resources provided so

that this objective can be achieved.

1.12 There is a need to promote introduction of newer varieties of

vegetables with a longer shelf life.

14

Report of Dr. Saumitra Chaudhuri Committee

Action to be taken by various Departments/Organisations

S.

No.

Organization

Department

Short Term Action

Points (up to 6

months)

Medium to long Term

Action points (beyond 6

months)

Suggested

Course of Action

by DAC

1 Planning

Commission &

DAC

Concerted action to

ensure that State

governments exempt

perishables from the

purview of APMC Act,

introduce electronic

auction platforms and

open membership of

Mandis on the basis of

bank guarantees (for

Delhi, Haryana,

Maharashtra, Gujarat, H.

P, A. P, Karnataka, U. P,

M. P, Rajasthan and

others)

o Ensure that gradually all

states exempt their

perishables from APMC

Acts as also reform their

agricultural marketing

system.

o Provision of appropriate

plan assistance for

strengthening the supply

chain network.

o Work out bankable

schemes project for

NABARD/banking sector.

Convene Meeting of

Chief Secretaries

of with Member

Planning

Commision ,

Cabinet Secretary

Secretary to PM

and members of

IMG.

Technical

presentation on

Electronic Auction

Platforms

2 Planning

Commission,

DIPP and Ministry

of Finance

o Facilitate External Commercial Borrowings for

strengthening supply chains.

o Promote PPP model with Viability Gap Funding.

o Model mentioned in the report with an investor in

cold chain/storage with “anchor customer” to be

encouraged.

o Take necessary step to ensure that investments in

this area receive the tax benefits as applicable for

infrastructure sector as announced in the Union

Budget 2011 – 12.

DAC can prepare

Background paper

with FICCI and CII

on Potential of ECBs

in the Cold Chian

sector

Request NDDB,

Mother Dairy (F&V),

FEHL, Concor ,

CWC to propose

PPP projects

Prepare Guidelines

for PPP with VGF

jointly with DPIP

and MoF , or

entrust mandate to

IDFC or ILFS

3 State

Governments

o Provide exemption to

perishables from the

application of APMC

Acts. This does not

require amendment in

the Acts.

o Reduce taxes on

perishable farm

produce sold through

APMCs to not more

than 2%.

o Remove inter-state

barriers for

movement of

perishables.

o Open membership of

o Introduction of

electronic auction

mechanism where daily

transactions are in

excess of Rs. 10.00

crore.

o Encourage private and

cooperative wholesale

markets.

o Introduce a scheme on

the lines of Private

Entrepreneurs

Guarantee (PEG)

scheme of FCI so as to

facilitate construction of

godowns for their own

Most points to be

covered in the Chief

Secretaries meeting

Request state

governments to

issue state specific

policy paper on

Establishment of

Cold Stores

States to bring out

paper on Potential

of Cold Chain in all

15

Mandis and replace

licensees by traders

registered with APMC

along with bank

guarantees.

o Farmers must be

given freedom to sell

directly to food

processing

companies,

aggregators and

retailers in addition to

selling in mandis.

o Bring out policy

paper/use friendly

guide for setting up of

cold storages in their

state.

intermediate storage

requirements.

o Streamline and liberalise

policy environment for

setting up cold storages.

o Set up joint ventures

with NDDB to set up

Safal like stores.

o Promote non-

horticulture cold chains

especially those relating

to meat, poultry and

fishing which are

relatively neglected.

o Simplification of

policies/procedures for

change in land use for

establishment of storage

and handling facilities

for horticulture produce.

o Assured power supply

for cold storages. This is

much easier where

separation of agriculture

feeders has been done.

o Encourage buy-in of

existing traders.

sectors, viz Horti,

Dairy, Fisheries ,

Food Processing .

Workshops with

existing Commsion

Agents to become

entrepreneurs in the

cold chain sector

4 Department of

Agriculture &

Cooperation

o Encourage setting up

of cold storages and

private

markets/terminal

markets.

o Strengthen NCCD and

issuance of

operational guidelines

for NCCD.

o Organize awareness

campaigns in

coordination with

other agencies/

organisations/ State

Governments.

o Organize workshops

on PHM and Cold

Chains.

o Strengthen National

Vegetable Initiative for

Clusters.

o Facilitate setting up of

electronic exchange

platforms for agricultural

produce.

o Bring out technical/

investment manuals for

cold chain projects.

o Harmonise the roles

and responsibilities of

different agencies

involved in development

of horticulture.

o Examine the feasibility

and facilitate

introduction of newer

varieties of vegetables

with longer shelf life.

Activate Technical

Committees on

Technical

Specification,

Standards, test

laboratory and

product certification

Committee,

Training, HRD and

R&D Committee,

Application of Non-

conventional

Energy Sources in

Cold Chain

Infrastructure and

Supply Chain &

Logistics for Post

Harvest Marketing. JS NHM to hold

regular interaction

with industry, NHB,

FEHL , Mother Dairy

and Joint

Secretaries/nodal

officers of the

relevant ministries.

HC is working on

newer varieties

16

5 Warehousing

Development and

Regulatory

Authority

o Notification of

standards developed

by NCCD.

o Organize awareness

campaigns to

promote NWR system

and registration of

cold storages as

warehouse.

o Link up cold chains into

a network and create

conditions where farmer

can obtain NWRs and

raise funds from banks.

o Facilitate setting up

electronic exchanges.

o Coordination with

banking sector.

State Horticulture

Missions have been

advised to hold

joint seminars with

WDRA

Meeting of Public

Sector Bank Chiefs

with Secretary

Agriculture and

Secretary Banking

6 Ministry of Food

Processing

Industries

o Promote setting up of cold chains.

o Take up the matter with Ministry of Finance to make

the subsidy scheme for cold chains open ended with

higher resources provision.

o Improve synergies with schemes of other Ministries

particularly DAC.

MoFPI has already

initiated action on

all these points

FACILITATING MEASURES

7 Ministry of

Railways/Concor

o Conduct feasibility

studies for

introduction of

dedicated horticulture

trains at select routes

in consultation with

the Department of

Agriculture &

Cooperation.

o Introduce dedicated

horticulture trains at

identified routes.

CONCOR may be

advised to take up

projects under VGF

window

8 Fresh and

Healthy

Enterprises Ltd.

o Conduct techno-feasibility studies for extending their

activities to more horticulture commodities viz

mango, banana, potato, brinjals, carrots, cauliflower,

tomato etc.

o Facilitate establishment of world class cold chain

infrastructure at identified places and provide logistic

solutions to various stakeholders.

FEHL has been

advised

accordingly. First

set of studies on

onion, citrus, lychee

and apple (JK)

expected by

September 15

9 Department of

Industrial Policy

and Promotion/

Ministry of

Finance

o Permission for FDI in multi-brand retail.

o Encourage actual inflows of FDI into cold chain

projects.

o Concessional line of finance/ capital grants for

encouraging cold storages to continue.

DPIP Policy

seminars with

Industry chambers

could devote

special session to

Cold Chain

10 National Dairy

Development

Board

o Expand ‘safal’ network to more centres.

o Strengthen supply chain network of F&V in

coordination with State Governments.

o Facilitate setting up electronic exchanges

notwithstanding past experiences.

NDDB/Mother Dairy

to seek support

under VGF

11 SFAC, NHM and

State Govt.

o Encourage PPP-IAD projects of corporate with State

Governments, especially with regard to FPCs,

contract farming arrangements, dedicated supply

chains for end users/ anchor customers,

encouragement for reefer vans and creation of

requisite infrastructure for improving shelf life.

Regional workshops

with State

Horticulture

Missions

12 NABARD o Organize seminars in coordination with banks and

State Governments on RIDF for cold chain logistics.

o Providing financial assistance.

17

APMC Reforms Scenario in various States

Stage of Reforms State / UT

States/U.T. s where

reforms to APMC Act has been done for Direct

Marketing; Contract Farming and Markets in

Private/Coop Sectors

Andhra Pradesh, Arunachal Pradesh, Assam,

Goa, Gujarat, Himachal Pradesh, Jharkhand, Karnataka, , Maharashtra, Mizoram, Nagaland,

Orissa, Rajasthan, Sikkim, Uttarakhand and Tripura

States/U. T. s where

reforms to APMC Act has

been done partially

a) Direct Marketing NCT of Delhi, MP.

Chhattisgarh,

b) Contract Farming Haryana, Punjab

Chandigarh, Madhya Pradesh, Chhattisgarh,

c) Private markets Punjab and Chandigarh

States/UTs where there is no APMC Act and hence not

requiring reforms

*Bihar, Kerala, Manipur, A&N Islands, Dadra & Nagar haveli, Daman & Diu, and Lakshadweep

States/UTs where APMC

Act already provides for the reforms

Tamil Nadu

States/UTs where

administrative action has

been initiated for the reforms

Meghalaya, Haryana, J&K, West Bengal,

Puducherry, NCT of Delhi and Uttar Pradesh

*APMC ACT is repealed w.e.f 1.9.2006

Status of APMC Rules

a) States where Rules have been framed completely :

Andhra Pradesh, Rajasthan, Maharashtra, Orissa, Himachal Pradesh, Karnataka

b) States where Rules have been framed partially, Mizoram only for

single point levy of market fee. Madhya Pradesh for Contract Farming & special license for more than one market. Haryana for contract

farming.

c) As per latest reports available, Uttaranchal, Madhya Pradesh

and West Bengal have already exempted market fees on fruits and vegetables. States of Bihar, Kerala, Manipur, A&N Islands,

Dadar Nagar haveli, Daman & Diu, Lakshadweep does not have APMC Act, so there is no market fees. Tamil Nadu has fully

amended the APMC act and no market fee is levied on fruits and vegetables.

18

National Centre for Cold Chain Development (NCCD)

The gap in the Cold Chain infrastructure necessitates focused interventions of its establishment at par with global standards and protocols

so that F&V produce has a longer shelf life, benefitting not only producers (farmers, processors), consumers and exporters but also enabling a

specialized industry to come up with a host of allied and ancillary activities and service providers. With this perspective, during 11th Plan Period,

National Centre for Cold Chain Development (NCCD) has been promoted jointly with stake-holders for promotion of quality regime in cold chain

infrastructure development and management. NCCD has been mandated to: (a) Provide an enabling environment for the cold chain sector to gain

prominence and invite the much needed private sector involvement.

(b) To establish standards and protocols related to cold chain testing, verification, certification and accreditation as per international

standards.

(c) To provide technical assistance to financial institution, government departments/agencies, and industry for selection of cold chain

component such as refrigeration units, refrigerated transport equipment, display cabinets, milk tanker etc.

(d) To offer HRD and technical advisory services to personnel engaged in this sector.

NCCD has been constituted as an autonomous body and has been

registered as a Society under the Societies Registration Act, 1860.

The aims and objectives of the Society are:

i. To recommend standards and protocols for cold chain infrastructure/building including post harvest management so as to

harmonize with international standards and best practices and

suggest mechanism for bench marking and certification of infrastructure/building, process and services provided by cold chain

industry.

ii. To suggest indicative guidelines for preparation of project reports for potential investors/entrepreneurs.

iii. To assess and develop appropriate IT-based management

information system for the cold chain infrastructure

iv. To undertake and coordinate Research and Development (R&D) work required for development of cold chain industry in consultation with

stakeholders.

19

v. To undertake and coordinate the task of Human Resource

Development (HRD) and capacity building. It may also conduct in-house training, short-term/long courses relevant for cold chain

development.

vi. To launch publicity campaign to educate the stakeholders including awareness building about the benefits of integrated cold chain.

vii. To recommend appropriate policy framework relating to

development of cold chain.

viii. To facilitate and foster the development of multi-modal transportation facilities for perishable agricultural, horticultural and

allied commodities and establishment of National Green Grid Perishable Commodities.

Progress made by NCCD

2nd meeting of Executive Committee of NCCD held on 16.07.2012

under the chairmanship of Secretary (DAC).

An interactive conclave was organized with a huge industry

participation to work out a road map on 17.07.2012.

Steps for having collaboration with Cemafroid (French Cold Chain

regulatory agency) has been initiated.

Membership of International Institution of Refrigeration (IIR), Paris has

been obtained. Director, NCCD is Indian delegate in IIR.

Process is underway to secure World Bank support for HR

Development.

Communication with HRD Ministry has been initiated started to

develop a B. Tech course in refrigeration technology in IITs.

IIT, Delhi requested to provide specialized vocational training to

technical manpower (technicians) of cold chain sector.

Technical Committees constituted to provide recommendations on

a) Technical Specification, Standards, test laboratory and product

certification Committee, b) Training, HRD and R&D Committee,

c) Application of Non-conventional Energy Sources in Cold Chain

Infrastructure and d) Supply Chain & Logistics for Post Harvest

Marketing.

Process for hiring office accommodation at NCDC Complex and hiring

of staff for NCCD is in final stage.

20

21

22

23

24

Minutes of the Meeting of Inter Ministerial Group (IMG) held on

31.07.2012

Inter Ministerial Group (IMG) on Cold Chain Infrastructure for

Agriculture and Allied sectors met on 31.07.2012 under the

chairmanship of Secretary, Agriculture. The list of participants is

Annexed.

Shri Sanjeev Chopra, Joint Secretary, National Horticulture

Mission (NHM) made a detailed power point presentation

regarding the current status of cold storage capacity in the

country, Agriculture Produce and Market Committee (APMC)

reforms, National Centre for Cold Chain Development (NCCD) and

Private-Public-Partnership for Integrated Agriculture Development

(PPPIAD). He also discussed the recommendations made in Dr.

Saumitra Chaudhuri Committee report and listed out the short and

long term action points on which action is required to be taken by

Department of Agriculture & Cooperation (DAC).

Secretary, Agriculture desired to obtain details of funding

under RIDF (Warehouse) from NABARD, especially related to the

permissibility of entrepreneurs to use commercial bank window or

state Government guarantee route for accessing RIDF credit. He

also suggested that the impact of exemption in excise duty may

be obtained in quantified terms of installation of cold chain

equipments/ new investments in the sector. With regard to APMC

reforms, he suggested that State wise information be obtained on

whether ‘direct marketing’ purportedly allowed by them included

all crops and commodities, or required a ‘commodity specific’

notification. Likewise on exemption of perishables from APMC Act,

he wanted to know whether it meant that ‘no levy was to be

paid’, or whether it only made it possible for perishables to be sold

outside the mandi. He also wanted to know whether private

25

markets also had to pay fees/cess to the APMCs to conduct their

operations. He further suggested that an assessment of the overall

ground level difficulties faced by cold chain entrepreneurs be

taken into account so that these can be addressed in our revised

schemes for 12th Plan. He also directed that information should be

collected from States about the income of APMCs, and the share

of perishables in the same. This should be done before the

proposed meeting of State Governments with Planning

Commission and Cabinet Secretary as proposed in the Action

Agenda.

Ms. Rajni Sekhri Sibbal, Joint Secretary, DAHD&F informed that

NCCD and MoFPI presentation should include milk and dairy sector

for cold chain. The capacity creation suggested in the report

would require an additional allocation of Rs. 6000 crore for this

sector. She also suggested that learning’s from NDDB would be

helpful for the horticulture train experiment.

Shri J. P. Meena, Joint Secretary, MoFPI informed that service

tax on cold chain should be removed, or brought to zero percent,

at least during initial years. Hybridized cold storages should be

brought under the scheme guidelines of DAC/MoFPI. Independent

accreditation should be taken in hand by DAC. He supported the

proposal to have Viability Gap Funding (VGF) in the sector, and

suggested that the possibility of interest subvention should also be

explored.

After detailed discussion following decisions were taken:

1. The action to be taken, as proposed by Horticulture

Division, on the short and long term action points of the Planning

Commission Report was approved.

26

2. The recommendations of the Report and its actionable

points will be shared with States.

3. States to be exhorted for using RIDF (Warehouse) for

creation of cold chain infrastructure. Clarifications on

implementation of RIDF will be obtained from NABARD.

4. Details of exemption on excise and custom duty on cold

chain equipments will be sought from the Ministry of Finance. The

extent of duty exemption granted by the Department of Revenue

for cold chain equipments after the notification will be ascertained

from the Department of Revenue.

5. PPP Division of Department of Economic Affairs (DEA) will

be requested to frame guidelines for PPP investment for cold chain

sector in India.

6. APEDA will share details of 20 clusters of fruits and

vegetables where large agribusiness houses are engaged in

exports so that the practices adopted in there Sectors could be

replicated.

7. DAC will hold meetings with private sector, CII, FICCI for

seeking their suggestions on and cold chain development in the

country.

The meeting ended with a vote of thanks to and from the chair.

27

Action taken on the decisions of IMG held on 31.07.2012

S. No. Decisions Action taken

1. The action to be taken, as proposed

by Horticulture Division, on the short

and long term action points of the

Planning Commission Report was

approved.

Short, Medium and Long term

action points have been sent to

States and action at DAC level

initiated.

2. The recommendations of the Report

and its actionable points will be

shared with States.

Recommendations and action

points have been sent to States

for taking action.

3. States to be exhorted for using RIDF

(Warehouse) for creation of cold

chain infrastructure. Clarifications on

implementation of RIDF will be

obtained from NABARD.

Guidelines of RIDF have been

obtained from NABARD and sent

to States.

4. Details of exemption on excise and

custom duty on cold chain

equipments will be sought from the

Ministry of Finance. The extent of duty

exemption granted by the

Department of Revenue for cold

chain equipments after the

notification will be ascertained from

the Department of Revenue.

Details have been received from

Ministry of Finance. However, the

details of extent of duty

exemption is still awaited.

5. PPP Division of Department of

Economic Affairs (DEA) will be

requested to frame guidelines for PPP

investment for cold chain sector in

India.

PPP Division of DEA have been

requested to frame guidelines

for PPP investment in cold chain

sector.

6. APEDA will share details of 20 clusters

of fruits and vegetables where large

agribusiness houses are engaged in

exports so that the practices

adopted in there Sectors could be

replicated.

Details have been received from

APEDA.

7. DAC will hold meetings with private

sector, CII, FICCI for seeking their

suggestions on and cold chain

development in the country.

CII has recently organized a two

day conference. CII and FICCI

are being requested to hold

meetings with private sector.

28

Reporting for " Creation and Management of Cold Chain Infrastructure” (2012 - 13)

S. No

Scheme of / Component

Achievements up to 31.03.2012 (2011-12)

Outlay / Target for 2012-13 Quarterly Achievements

1st

Quarter 2nd

Quarter 3rd

Quarter 4th

Quarter

Capacity Created

Financial Assistance

Project Cost

Capacity Financial Assistance

Capacity Created

Financial Assistance

Capacity Created

Financial Assistance

Capacity Created

Financial Assistance

Capacity Created

Financial Assistance

1 NHM/PHM 571000 118.79 342.00 570000 205.00 -- -- 95917 17.41

2 HMNEH 18523 63.87 113.00 31055 35.00 -- -- -- --

3 NHB 587456 81.10 800.00 640000 87.00 58683 9.688 46001 10.61

4 MoFPI 25705^ 83.01 852.44 155000 86.00 -- 12.50 -- 8.69

5 DOAH /Dairy 1055.55* TLPD

664.86* @ 500 TLPD

100.00 -- -- -- --

6 DOAH / Fishery

Ice Plants 949 (19 Nos)

-- 12 Nos 750 -- -- -- -- --

Ice plants/Cold Storage

185 (4 Nos)

-- 5 Nos 100 -- -- -- -- --

7 APEDA 22170 257.32 50.00 11110 50.00#

8 NCDC 3000 2.71 6.00 10000 5.40 -- -- -- --

Capacity in MT, Project Cost & Financial Assistance in Rs Crore.

* Cumulative achievement since commencement of IDDP & CMP scheme @ The scheme has component other than creation of chilling capacity also and the actual allocation/creation of chilling capacity would be based on demand for assistance for this component. # APEDA assistance is on overall project and not specific to cold stores only in case of common user facilities. The budget of Rs. 50.00 crore is overall for Common Infrastructure Scheme which includes several components other than cold stores/specialized cold stores. Hence the assistance released and projected to be released would be different than the overall budget – both for common and individual exporter segments. EFC for scheme for Infrastructure Development for the 12

th Five Year Plan has been submitted to Department of Commerce for consideration and

approval. ^ In addition a cold chain capacity of 4.00 lakh liters of milk and IQF capacity of 1.5 MT/hr has already been created.

29

Production of Horticulture Crops in India

Production: Million Metric Tons

Year Fruits Vegetables Total (Horticulture Crops)

2004-05 50.90 101.20 166.90

2005-06 55.40 111.30 182.80

2006-07 58.90 116.00 192.20

2007-08 63.50 125.90 207.10

2008-09 68.50 129.10 214.70

2009-10 71.50 133.70 223.10

2010-11 74.90 146.50 240.40

2011-12 (P) 77.50 149.60 247.51

*source: DAC

30

Estimate of economic value of harvest and post harvest losses in India

S. No.

Crop / commodity

*Production (million MT)

*Price Rs/MT

Losses estimated

(%)

Estimate of economic value of

the losses (` in crores)

(i) Cereals 211.61 51,676.5

12,593

(ii) Pulses 11.974 1,27,229.7 4.3 – 6.1 1,735

(iii) Oilseeds 31.66 1,25,367.3 2.8 – 10.1 5,107

(iv) Fruits

1 Apple 1.622 47,771.6

953

2 Banana 20.858 9,262.5

1,275

3 Citrus 7.097 18,774.6

839

4 Grapes 1.668 31,364.2

434

5 Guava 1.856 12,194.5

407

6 Mango 13.501 19,232.2

3,298

7 Papaya 2.405 8,833.3

157

8 Sapota 1.191 10,727.5

74

Total 50.198 1,58,160.4 5.8 – 18 7,437

(v) Vegetables

1 Cabbage 5.724 5,498.9

217

2 Cauliflower 5.524 8,211.7

308

3 Green Pea 2.37 23,010.8

562

4 Mushroom 0.037 33,475.0

15

5 Onion 10.655 7,349.9

587

6 Potato 30.195 9,679.4

2,630

7 Tomato 9.878 8,139.1

997

8 Tapioca 8.429 6,725.5

556

Total 72.812 1,02,090.3 5.8 – 18 5,872

(vi) Spices and plantation crops

1 Arecanut 0.0559 71,866.8

32

2 Black Pepper 0.069 1,13,106.0

30

3 Cashew 0.62 1,27,192.7

87

4 Chilli 0.0117 14,380.8

1

5 Coconut 4.06 29,591.0

649

6 Coriander 0.2332 20,571.2

35

7 Sugarcane 355.52 1,489.59

4,607

8 Turmeric 0.837 52,102.1

323

Total 361.4068 4,30,300.2

5,764

(vii) Livestock produce 163.358 3,14,105.6

5,635

Total 44,143

* Period of study is 2005-2007

**Values are at May, 2009 price index. Source: CIPHET Report

31

RIDF (Warehouse) Sanctions and Disbursements During 2011-12

(Rs. Crore)

Sr. No.

Name of the State Government/Bank Amount Sanctioned

Amount Disbursed

a b c d

1 Tamil Nadu 261.23 89.04

2 Bihar 157.64 31.53

3 Karnataka 62.92 9.61

4 Puducherry 1.53 0.00

5 Gujarat 42.46 8.49

6 West Bengal 118.68 23.73

7 Kerala 113.34 22.66

8 Maharastra 459.93 92.00

9 Tripura 5.50 0.00

10 Chattisgarh 140.40 28.08

11 Haryana 14.09 7.11

12 Madhya Pradesh 94.90 21.00

13 Rajasthan 21.20 4.00

Sub-Total 1493.82 337.25

14 Allahabad Bank 89.92 89.92

15 Andhra Bank 57.58 57.58

16 Axis Bank 95.74 95.74

17 Bank of Maharashtra 40.63 40.63

18 Corporation Bank 20.26 20.26

19 Cosmos Bank 1.25 1.25

20 Dena Bank 7.72 7.72

21 Federal Bank 6.13 6.13

22 HDFC Bank 54.02 54.02

23 IDBI Bank 33.69 33.69

24 Indian Overseas Bank 24.53 24.53

25 Nainital Bank 7.16 7.16

26 Oriental Bank of Commerce 187.21 187.21

27 Pragathi Grameen Bank 1.37 1.37

28 Punjab & Sind Bank 21.29 21.29

29 Gurgaon Grameen Bank 2.20 2.20

30 State Bank of India 73.76 73.76

31 Haryana State Cooperative Bank 3.38 3.38

32 Gujarat State Cooperative Bank 8.40 8.40

33 State Bank of Patiala 22.83 22.83

Sub-Total 759.08 759.08

Grand Total 2252.90 1096.33

Amount Sanctioned for Dry Warehouses

State Governments 1470.93 336.59

Banks 638.75 638.75

Amount Sanctioned for Cold Storages

State Governments 22.89 0.66

Banks 120.33 120.33

32

33

34

35

36

37

38

39

40

41

42

43

44

Annexure –VI

Note : To obtain an aligned printout please download the (516 kb) version to your machine and then use respective software to print the story.

Date: Jul 02, 2012

Master Circular on External Commercial Borrowings and Trade Credits

RBI/2012-13/12 Master Circular No.12/2012-13

July 02, 2012

To,

All Category – I Authorised Dealer Banks

Madam / Sir,

Master Circular on External Commercial Borrowings and Trade Credits

External Commercial Borrowings and Trade Credits availed of by residents are governed by clause (d) of sub-section 3 of section 6 of the Foreign Exchange Management Act, 1999 read with Notification No. FEMA 3/ 2000-RB viz. Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, dated May 3, 2000, as amended from time to time.

2. This Master Circular consolidates the existing instructions on the subject of "External Commercial Borrowings and Trade Credits" at one place. The list of underlying circulars / notifications, consolidated in this Master Circular, is furnished in the Appendix.

3. This circular will stand withdrawn on July 1, 2013 and be replaced by an updated Master Circular on the subject.

Yours faithfully,

(Rudra Narayan Kar) Chief General Manager

End use as at para V of Master Circular on External Commercial Borrowings and Trade Credits

ECB can be raised only for investment [such as import of capital goods (as classified by DGFT in the Foreign Trade Policy), implementation of new projects, modernization/expansion of existing production units] in real sector - industrial sector including small and medium enterprises (SME) and infrastructure sector - in India. Infrastructure sector is defined as (i) power (ii) telecommunication (iii) railways (iv) roads including bridges (v) sea port and airport (vi) industrial parks (vii) urban infrastructure (water supply, sanitation and sewage projects) (viii) mining, exploration and refining and (ix) cold storage or cold room facility, including for farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat.

.

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