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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
2
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
4
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.
6
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.
7
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.
8
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
9
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.
10
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,
11
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.
12
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.
13
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.
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
44
Annexure –VI
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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.
.