Cold storage is a service-oriented business that effectively stores and preserves perishable edible and non-edible commodities, such as vegetables, fruits, etc., from spoiling. In India, starting a cold storage business requires an initial investment of 3-4 crore, which is a bit costly compared to other businesses. However, if you're interested in starting your own cold storage business in India, banks provide easy loans for the same, along with government-enabled subsidies.
Cold storage is a booming business in India that yields huge profits in the long run. Generally, cold storage comes in two categories: product-specific and multipurpose. In the next few minutes, you'll learn about the investment amount, subsidies, banks that provide easy loans for cold storage in India, and some necessary requirements.
Investment needed for cold storage
Cold storage is a new term in the Indian market and is an influential business opportunity for traditional Indian entrepreneurs. The initial investment in cold storage is relatively high. The costs and expenses of cold storage include:
Acquiring land
In order to start your own cold storage setup, one needs to invest in a piece of land where the plant will be framed. The minimum land required for the same is 1800 to 2000 sq metres, and it must be located near retail shops and farmlands. The cost of land varies from state to state.
Construction of the plant
The facilities built at the plant must be up-to-date and have the necessary resources. The room is constructed similarly to other rooms except for the requirement of insulation charges. Generally, cold storage rooms are built using masonry work and get plastered with a minimum of 25 mm thick (mortar) plaster material.
After the plaster insulation on walls and ceilings, thermocol, expanded polystyrene, cork, etc., work should be carried out to make it a cold storage facility. It is advised to use PUF panels having stainless steel as panel material to get longer insulation life. In India, it costs around INR 9 lakhs for a 50-ton capacity storage facility.
Permits and licences
In India, the cold storage business requires some permits and licences to get commenced. One such licence that is needed is State FSSAI for storage business with a capacity of up to 50,000 MT, eligibility is dependent on capacity.
It costs nearly INR 2000-5000 per annum for a state licence and INR 7500 per annum for a central licence. (Note: Validity and renewal cost included)
Consent certificate
The business category comes under the orange category industry, but recently, CPCB has placed it under the green category. Industry entrepreneurs need to obtain pollution control NOC under the green category from the State control board or pollution control committee.
Additional licences
MSME registration, GST registration, Fire NOC, Sanction of water supply.
Electricity, water, and other expenses
The cost of basic expenditures like electricity, water, and employees' salaries will be included in the expenses like any other business. In order to run 2000 MT cold storage, roughly the power will be somewhere in between 170-255 KVA.
In total, 15% of electricity will be consumed in fans, motors, pumps, conveyors, and lighting. Sanitation & cleaning approximately account for 5% of electricity, and the remaining 80% of electricity is consumed in chilling, refrigeration, and freezing. So exactly if calculated, it will take nearly or more than 2,20,542 KVA of electricity for 2000 MT cold storage. The cost will be somewhere between INR 19-20 lakhs annually.
Water
The charges for water consumption in business activities are significantly dependent on the amount of water required and consumed, and may vary depending on the state. Other charges may include operating expenses such as employee salaries, maintenance, and licence renewal fees.
Subsidies and Credit Facilities for Cold Storage in India
The initial investment required for starting a cold storage business can be high, making it a tough job for Indian entrepreneurs. However, funding can be secured from banks and other financial institutions, along with subsidies from the National Horticulture Board of India under the cold storage scheme. Under the scheme, funding ranging from 65-75% of the total project cost is available, with amounts ranging from INR 25 lakhs to INR 1 crore secured with collateral.
In addition, the central and state governments provide subsidies ranging from 35-50%, with eligibility criteria being determined by the relevant ministry and banks that grant loans.
Leading banks in India that offer cold storage
Leading banks in India that offer cold storage loans include State Bank of India, Union Bank of India, NABARD, IDBI Bank, Vijaya Bank, Canara Bank, and Corporation Bank.
The loan amount ranges from INR 25 lakhs to INR 1 crore, with a repayment tenure of 6-9 years. Collateral is required and must cover 100% of the loan amount, with funding available up to 60-75% of the total project cost.
Conclusion
Cold storage businesses are becoming an increasingly popular business opportunity for traditional entrepreneurs, with high returns but a relatively high initial investment of 3-4 crores. Those interested in starting a cold storage setup should carefully consider costs, licensing requirements, subsidies, and other relevant factors.
One important factor to note is that government subsidies can save entrepreneurs a significant amount of money, and some leading banks offer loans at lower interest rates.
FAQs
What is the biggest cold storage?
The biggest cold storage setup is located at 2800 Polar Way in Richland, Washington, United States.
Who owns cold storage in India?
Nearly 95% of cold storage in India is owned by private entities, 3% by the cooperative sector, and the remaining 2% by Public Sector Undertakings.
How can one apply for a cold storage subsidy?
One can apply for a cold storage subsidy online or offline through the National Horticulture Board.
Which Indian state has the highest number of cold storage facilities?
Uttar Pradesh has nearly 1817 cold storage facilities, with West Bengal, Bihar, and Uttar Pradesh accounting for 60% of cold storage jointly.
What is the best type of cold storage?
Refrigerated containers are one of the most basic and cost-effective types of cold storage. These containers are often flexible and mobile.
