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For a long time, India's Cold Chain sector has been avoided owing to expensive startup and operational expenses, as well as a lack of appropriate infrastructure. Stakeholder sentiment, on the other hand, is beginning to shift. The cold chain industry is known as the sunrise industry because of its importance and investment possibilities in the near future. The sector is growing at a rapid pace because to the government's ongoing efforts and favorable policies such as granting infrastructure status to the cold chain business, profit-linked tax holidays, priority sector lenders, and lower GST. Furthermore, the government's decision to exempt service tax for cold chain services such as pre-conditioning, pre-cooling, ripening, waxing, and retail packing, as well as excise duty exemption for refrigeration machinery and parts used for the installation of cold storage or refrigerated vehicles, has boosted the segment even further.
The cold chain industry in India continues to be driven by growth in the organized food delivery and e-commerce industries. Other reasons driving the cold chain sector include a growing emphasis on food waste reduction and government efforts. For example, FDI of up to 100% is permitted, as is viability gap finance of up to 40% of the project cost. India's Cold Chain sector prefers the development of a "one-stop-shop" approach to provide end-to-end logistical solutions.
The Indian government is leveraging private cold chain providers to store and deliver vaccinations. The Universal Immunization Programme (UIP) of the Indian government will distribute the majority of vaccinations. Because the vaccine product requires refrigeration or freezing for storage, the safe distribution of vaccinations for mass immunization against COVID-19 necessitates massive cold chain facilities throughout the country. As a result, private cold chain actors will be able to create long-term economic possibilities in the storage, transportation, and distribution of COVID-19 vaccine goods.
Essential products including as groceries, food, and medications have seen an upsurge in demand because of the epidemic. With OTP-based contactless delivery of products, many logistics businesses can meet this demand while complying to safety regulations. Logistics aggregators should focus on boosting service efficiency and cost optimization by leveraging cutting-edge technologies.
The government is taking steps under the Atmanirbhar Bharat and Made in India missions to get Micro, Small, and Medium Enterprises (MSMEs) back on track, as they account for one-third of the country's GDP. It's also assisting by interacting with stakeholders involved in the supply of critical services, as well as B2B e-commerce operators and procurement domains that have been left perplexed.
The RBI has also announced a term loan moratorium, deferred interest payments on working capital facilities, and simplified working capital financing. While these measures have given the logistics sector hope, the government should take a few more steps to help the struggling industry, such as deferring MSME loan repayment or extending the repayment period, a GST exemption, subsidised warehouse or inventory management facilities, and measures to mitigate the impact on MSME labor workforce, to name a few. The logistics business in India is anticipated to be driven by strong growth backed by government reforms, transportation sector development plans, rising retail sales, and the e-commerce sector.
Another strategy used by logistics aggregator companies is to assist SMEs and align with the government's self-sufficiency initiative. Logistics aggregators have become the one-stop fulfillment option for small-enterprise owners who wish to take their firm online and expand their client base. In the aftermath of the coronavirus epidemic, the logistics industry has emerged as India's top job-creating sector, according to the National Skill Development Corporation (NSDC). Exporters and SMSEs should develop a strategic strategy to demonstrate their resilience and dynamism by assisting them in highlighting their products internationally.
The necessity for a constant and smooth cold chain transportation and storage logistics capabilities, which is the infrastructure we lack in the nation, especially in the hinterlands, sets the supply chain complexity apart from any other comparable distribution skew (aka Stock Keeping Units or SKUs).
To summarize, India's future prosperity and economic growth will be highly reliant on the development of its logistics industry. This is necessary not just for creating jobs and delivering wide social benefits to farmers and low-wage employees, but also for competing with the rest of the world in terms of last-mile connection, efficient transportation, and delivery speed, among other things. This would improve India's image as a desirable investment location and help the country's manufacturing export performance.