How to Start Cold Storage Business In India, Subsidy, and Loan

Table of Contents

Introduction to how to start cold storage business in India: Hello farmers, gardeners, investors, and business owners, are you planning to set up a small-scale or commercial cold storage business in India? Well, you are in right place to learn about starting a cold storage business in India. For a profitable cold storage business, you must have a proper business plan to succeed. You need to spend some of your valuable time finding out facts about setting up a cold storage warehouse unit.

What you can learn from this article:

  • Cold storage business in small scale
  • Cold storage business tips and ideas
  • Small cold storage business plan
  • Cold storage business investment cost
  • Requirements to start a cold storage business
  • Cold storage business profit
  • Cold storage business subsidy
  • Cold storage business model
  • Pros and cons of the cold storage business
How to Start Cold Storage Business In India
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How to Start Cold Storage Business In India

Functions and purpose of a cold storage business

Well, do you know why it is necessary to have cold storage especially countries like in India? Don’t think twice, in India there is a huge wastage of food and we should supply the food as per market demand. So, the main purpose of setting cold storage unit is to preserve the farm produce such as vegetables, crops, grains, fruits, meat, poultry, fish, aqua products, spices, and other food materials like dairy products.

There is a huge demand for cold storage and you can avail yourself of subsidies and loans in India. We will cover in the coming paragraphs how to avail subsidies and loans from banks. There are types of cooling machines available in the market Indoor cooling units, Industrial cold storage units, and cold room cabinets

Requirements to start a cold storage unit

Location plays a vital role in the profitable cold storage business. You must make sure to set up the cold storage warehouse close to where most of the food production happens so that the transportation cost and freshness of products are maintained. You also ensure to build a cold storage close main roads, and towns and suburbs of cities so that accessibility would be easy.

The land area of the cold storage depends on your business plan. Some people may go for the commercial multi-stored warehouse whereas some prefer small cold storage units. It is a good idea to start with a small scale and expand it commercial scale. Visit any nearby cold storage businesses and find out some basics.

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Requirements to start a cold storage unit
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Another important factor to consider in building a cold storage unit is to have a power backup in case of any electricity shortage. You may also consider solar power panels to serve the purpose. We all know that food should be stored without any power cuts; hence this could be a priority for all.

You should do some kind of research on the equipment needed to build cold rooms. The basic things to consider are the roof, walls, floor, cooling machines, humidifiers, and design of cold storage like the single floor or multi-stored, etc. In case of any repairs to freezers/cooling machines, you must have a quick fix otherwise the food stored may be spoiled. 

You must keep checking the cold rooms for proper temperatures and relative humidity and it is suggested to have 2 to 3 people for proper maintenance of cold storage. These resources must be available 24/7. A good electrician is mandatory in order to avoid any kind of interruption of the power supply. You may also have a backup like power generators to handle emergency situations.

Remember cold storage business is not an overnight profitable business; it will take a long time to get more profits. You must set the goals of marketing and reach them on time. You must apply some marketing strategies like advertising on local media, and posting about your business on food/agriculture/gardening blogs like Agri Farming. You can also find agents who can increase the branding and take your business into the food industry or farming sector. You must get a trade license to start a cold storage business.

Cost to build cold storage unit in India

How much do you need to invest in building cold storage units? Well, it depends on many factors such as volume of cold storage or area of the cold storage unit, type of cold storage, equipment, backup, and location of the cold storage unit. On average, the cost to build cold storage unit of 1000 MT is about INR 2.5 crores to 3 crores. Based on this you can guess starting costs of 500 MT, 1500 MT, 2,000 MT, 5,000 MT, and 10,000 in India. 

In case you miss this: Cold Storage Project Report, Bank Loan, and PDF

Cost to build cold storage unit in India
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What are the advantages of a cold storage facility in India? 

  • Increase the shelf-life of fruits, vegetables, meat, poultry, aqua products, medicines, vaccines, and other foods.
  • Controlled environment with suitable temperatures
  • Providing the facility to make food throughout the year
  • You can earn more profits 
  • Reduce the wastage of farm produce
  • It is a one-time investment and you can yield profits for your life with proper maintenance and a business plan
  • This may reduce food inflation
  • Perishable food is being protected with long shelf-life
  • Effective space utilization
  • Warehouse cold rooms are beneficial for agriculture farmers to store their produce

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What are the advantages of a cold storage facility in India? 
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Some disadvantages of cold storage

  • The initial cost of building cold storage is high
  • Drastic temperature changes
  • The electricity bill may be high
  • If temperatures and humidity are not maintained properly, you may end up at a huge loss.
  • Maintenance charges will be high if the location is not properly selected
  • 24/7 monitoring is required to retain the freshness of cold-stored food

Points to remember while starting a cold storage business

  1. You must provide soft water and backup in case if power cuts
  2. Make sure the land used is already converted from non-commercial to commercial land
  3. Proper road connectivity 
  4. Proper water drainage is essential
  5. Soil testing/load-bearing test must be done
  6. Check with local authorities to find out what kind of documents and licensing are required to establish cold storage units.
  7. There may be some restrictions on cold storage operations depending on the location/area/region

Loans and Subsidies for starting a cold storage business in India

You can avail of loans at good interest rates from many financial institutions/banks. You can get a subsidy for cold storage business from the government/ NHB (National Horticulture Board) in India. The subsidy varies from 30 to 50%. Some Indian states may offer more to encourage this business model.

It is a good idea to consult cold storage experienced professional in India who can provide a complete solution to your cold storage business in India. You can avail the following products and services from them.

  • Cold chain solution
  • Cold storage set up
  • Frozen storage and blast freezer
  • Sorting and grading line
  • Individual quick freezing -IQF
  • Refrigeration plants maintenance
  • ICE plants
  • Packhouse
  • Ripening chambers
  • Cold storage project report
  • Cold storage business plan
  • Maintenance of cold storage units
  • Cold storage project execution work
  • Other cold storage-related work

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Loans and Subsidies for starting a cold storage business in India
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Some commonly asked questions of a cold storage business in India

How do I start a small cold storage business in India?

  • Prepare a business plan and detailed project report
  • Select proper location
  • Select type of cold storage plant
  • Understand the demand and customers
  • Get the required License and Permits
  • Understand the function of the cold storage plant
  • Research and buy the equipment needed
  • Fix your budget according to your business plan
  • Consult any cold storage professional
  • Get your brand into the market with different advertising strategies
  • Maintaining your cold storage is a very important factor to succeed

Is the cold storage business profitable in India?

Yes, it defiantly highly profitable with a good business plan, marketing, and regular maintenance.

What are the symptoms of chilling injury in the cold storage unit?

Chilling injury can be identified by Discoloration, surface damage, and water soak.

What kind of off-season farm produce can be stored in the cold storage warehouse or units?

Vegetable seeds, Crop seeds, Grains, and Chillies.

Is it mandatory to use soft water in cold storage plants?

Yes, avoid hard water and set up a water softener in case you are using bore water or any other hard water.

Can you able to store onions in cold storage?

Yes, but not recommended as you cannot store it for more than 6 to 7 months because of deterioration problems. You cannot transport straight to market as it requires some kind of heating to remove any condensation. 

What is the minimum space required to start a cold storage business?

Well, it all depends on your budget and other factors; however, a minimum of 1000 to 1500 square feet will serve the purpose.

Is there any subsidy provided by the Indian government to establish a cold storage unit?

Yes, usually you can expect 30 to 50% in most of the states. You can contact the national horticulture board for more current information on the subsidy amount.  To avail of input subsidy, you must present a detailed project report (DPR), Approved/sanctioned loan details along with a duly filled application form.

Is there any loan facility available for starting a cold storage plant in India?

Yes, you must submit a detailed project report (DPR) and there are many financial institutions/banks that can provide business loans with different interest rates, check your local banks for more information on this. 

How much should you invest to start a cold storage business in India?

Well, it depends on the volume of storage and the type of cold storage. Usually, the average cost of building a 1000 MT cold storage may cost from 2.5 crores to 3 crores. However, this number may change from time to time.

What are the requirements to store potatoes in cold storage plant?

Well, you must maintain a temperature of 2°C to 4°C for seed potatoes and 8°C to 12°C for table and processing potatoes.

How many cold storages are there in India?

India has about 10,000 cold storage facilities and this number will keep changing from time to time.

How much profit you can get from the cold storage business yearly in India?

There is no specific number to mention. Profits in the cold storage business depend on the product being stored, the volume of cold storage, and the price charged per day.  

What is important to retain the freshness of produce in cold storage facilities?

Temperature and relative humidity are the main considerations in cold storage technology.

How much land is required for setting up a multipurpose cold storage facility in India?

Approximately, one-acre land will serve the purpose to set up a multi-commodity cold storage facility.

How solar power can help to run cold storage plants?

Solar energy can be used to operate for pre-cooling and to store most perishable produce like vegetables, flowers, and beverages.

Can you able store tomatoes in cold storage plants?

Yes for a short period of time, however, you lose the flavor and pre-ripe tomatoes can be stored for up to 2 to three days with minimal flavor loss. It is not recommended to store the tomatoes in cold plants.

Is there any certificate required to start a cold storage facility in India?

Yes, an FSSAI (Food Safety and Standards Authority of India) certificate is required.

What are some challenges in the cold storage business?

The common problems are condensation, microbial growth, damaged cooler doors, and too much heat exposure.

Is there any scope to make profits in the cold storage business in India?

Yes, there is a huge scope and market to start a cold storage business in India, though an initial investment to start a cold storage plant is pretty high, you will yield more profits in a long tenure.

Is any cleaning required in the cold storage units/plants?

Yes, it is a must task that should be carried out on regular basis as part of maintenance.

How do farmers get benefited from agricultural cold storage warehouse facilities?

Well, farmers can utilize cold storage units to store their commodities with minimal cost, they can save space, and also they can sell their agriculture products when there is a good demand in the market. Farmers can also get benefit from minimal marketing effort as the cold storage facility has already established a brand entity.

What kind of foods can be stored in cold storage facilities in India?

Vegetables, fruits, meat, poultry, fish and aqua products, dairy and milk products, and processed foods.

Is a project report required to get loan approval from banks in India?

Yes, you must submit a detailed project report which will include your out-of-the-pocket investment, project location details, and another execution process of the business plan along with filling out the form.

Conclusion

First and foremost, thank you for reading this guide for starting cold storage business in India. As we all know the population of India tremendously increasing, and there would food supply challenges in near future hence setting up cold storage units for preserving the food is very much required and profitable.

2 COMMENTS

  1. Thanks for the very good article. We are planning to open a cold storage unit. Please provide more information about the companies which are offering cold storage units.

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