Subsidy in India for setting up Cold Chain

The

Ministry of Food Processing Industries (MOFPI) in India provides very good financial assistance for the setting up of a cold chain in India. This article briefly details the scheme available with MOFPI for setting up a cold chain in India.

What is Cold Chain?

The cold chain consists of cold storage, cold transport, value addition and preservation infrastructure to provide an integrated cold chain without any break from the farm gate to the consumer. It covers pre-cooling facilities at production sites, reefer vans, mobile cooling units as well as value addition centres which includes infrastructural facilities like Processing/ Multi-line Processing/ Collection Centres, etc. for horticulture, organic produce, marine, dairy, meat and poultry etc.

Who can set up a cold chain?

Individual or group of entrepreneurs who have a business interest in cold chain solutions can set up an integrated cold chain and preservation infrastructure. It can also be set up by corporates and industries who manage cold chain supply chain enabling the linking of producers to the processors and marketers.

What are the criteria’s for obtaining financial assistance for the cold chain?

A cold chain contains multiple facilities at various centres as under. To avail financial assistance under the scheme, any two of the following facility from the below will have to be set up by the unit.

i) Production Facility: Minimal processing centre at the farm level and centres to have the facility for weighing, sorting, grading waxing, packing, pre-cooling, control atmosphere (CA) / modified atmosphere (MA) cold storage, normal storage and Individual Quick Freezing (IQF).

ii) Transport Facility: Transport level consists of mobile pre-cooling vans and reefer trucks required to transport goods and products in a temperature-controlled atmosphere.

iii) Distribution Facility: Distribution facility consists of distribution hubs with multi-products and multi-control atmosphere (CA)/ modified atmosphere(MA) chambers/ cold storage/ Variable Humidity Chambers, Packing facility, cleaning in the process (CIP), fog treatment, individual quick freezing (IQF) and blast freezing.

What is the amount of financial assistance provided for setting up of cold chain by MOFPI?

Ministry of Food Processing Industries (MOFPI) provides financial assistance (grant-in-aid) to the tune of 50% the total cost of plant and machinery and technical civil works in General areas and 75% for NE region including Sikkim and difficult areas (J&K, Himachal Pradesh and Uttarakhand) subject to a maximum of Rs.10 crore.

How is the financial assistance provided during the setting up of the unit?

The financial assistance will be released in 3 instalments after the investors/promoters have paid or invested their share of the capital fully as per the following schedule:

1st Installment: The 1st instalment of 25% of the total grant under the scheme will be released after ensuring that 25% of the promoter’s contribution and 25% of the term loan has been spent on the project.

2nd Installment: The 2nd instalment of another 50% of the total grant under the scheme will be released after ensuring that utilization of the first instalment of grant and 75% of promoter’s contribution & 75% of term loan has been spent on the project. Utilization certificate for the first instalment has to be submitted by the promoter at the time of making claim for the second instalment.

3rd Installment: The 3rd and final instalment of remaining 25% of the grant assistance will be released after ensuring that the utilization of the second instalment and 100% of promoters and 100% of term loan has been invested in the project. Further, the project should have achieved completion & commercial operation should have started. Finally, the promoter must submit the utilization certificate for the second instalment at the time of making a claim for the 3rd and final instalment.

How should the application for financial assistance be made?

The application for financial assistance for setting up of a cold chain should be made in the prescribed format to the Ministry of Food Processing in India in the prescribed format. Alternatively, you can talk to one of IndiaFilings Business Expert to help you apply for the scheme and obtain approval.

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Frequently Asked Questions

Common questions about Subsidy for Cold Chain Setup in India.

A cold chain refers to an integrated system of facilities and equipment for maintaining a specific low-temperature range during the transport, storage, and distribution of temperature-sensitive products, such as fresh fruits, vegetables, dairy products, meat, and other perishable goods. It ensures that the products remain fresh and safe for consumption by preventing spoilage and contamination.

Individuals, groups of entrepreneurs, corporations, and industries involved in managing cold chain supply chains can set up an integrated cold chain and preservation infrastructure in India. The applicants should have a business interest in providing cold chain solutions to link producers, processors, and marketers.

To avail financial assistance from the Ministry of Food Processing Industries (MOFPI) in India, the applicant must set up at least two of the following facilities: a production facility (sorting, grading, packing, pre-cooling, etc.), a transport facility (mobile pre-cooling vans, reefer trucks), or a distribution facility (distribution hubs with cold storage, packing, freezing, etc.).

MOFPI provides financial assistance (grant-in-aid) of up to 50% of the total cost of plant, machinery, and technical civil works in general areas, and up to 75% in the North-Eastern region, Sikkim, and difficult areas like Jammu & Kashmir, Himachal Pradesh, and Uttarakhand, subject to a maximum of Rs. 10 crore.

The financial assistance is released in three installments: 25% after spending 25% of the promoter's contribution and 25% of the term loan, 50% after spending 75% of the promoter's contribution and 75% of the term loan, and the remaining 25% after completing the project and commencing commercial operations.

The application for financial assistance should be made in the prescribed format to the Ministry of Food Processing Industries (MOFPI) in India. Alternatively, one can seek assistance from IndiaFilings Business Experts to help with the application process and obtain approval.

A cold chain typically includes pre-cooling facilities at production sites, reefer vans or mobile cooling units for transportation, and value addition centers with facilities for processing, multi-line processing, collection, cold storage, controlled atmosphere storage, and individual quick freezing (IQF) for various products like horticulture, organic produce, marine, dairy, meat, and poultry.

A cold chain is essential for perishable products like fresh fruits, vegetables, dairy, meat, and poultry to maintain their quality, freshness, and safety during transportation, storage, and distribution. It helps prevent spoilage, contamination, and food waste, ensuring that the products reach the consumers in optimal condition.

Setting up a cold chain facility can provide several benefits, including reducing food waste, extending the shelf life of perishable products, improving food safety and quality, facilitating access to domestic and international markets, and generating employment opportunities in the food processing and logistics sectors.

Yes, existing businesses or corporations involved in managing cold chain supply chains and having a business interest in cold chain solutions can apply for financial assistance from MOFPI for setting up an integrated cold chain and preservation infrastructure in India.