High Energy Costs: Operating costs for the cold storage business in India are approximately
`80-90 per cubic ft. per year as compared to `40 per cubic ft. per year in the West. Energy
expenses alone make up about 30 percent of the total expenses for the cold storage industry
in India compared to 10 percent in the West. These factors pose as a high entry barriers to
potential players in the business.
Rising Real Estate Costs: With the rising real estate price, the cost of setting up a cold storage
units is also rising. It constitutes approximately 10-12 percent of the project cost. Also, as these
units are not mobile, so choosing the right location becomes a critical factor. Being a capital-
intensive project, it requires heavy investment in fixed assets like plant and machinery, building,
insulation and panels. Depending on the size of the project and design of the infrastructure,
the Capex is derived. Typically, a traditional cold storage of multi-tier walk in with a capacity
of 6,000 tons would cost `5 crore, excluding land.
Uneven Distribution of Capacity: A majority of investment in setting up cold storages in India
has been in states like Uttar Pradesh, Maharashtra, Gujarat, Punjab and West Bengal. Further
on analyzing the commodity wise storage capacity it is found that major cold storages have
been set up to cater single commodities and this creates bottleneck for other perishable
commodities.