Role of Cold Chain in fostering Agribusiness in India: Prospects and Policy Insights

The prospects of agribusiness in the context of an emerging economy such as India are primarily subject to the degree of integration between farm activities on the one hand and secondary processing of farm produce in food processing units on the other. The diversification of farm activities and market for processed food items are greatly influenced by several economic and institutional factors. In this context, this study attempts to bring in to focus the critical role of cold chain (CC) which, as an infrastructural pre-requisite, has the potential of enhancing the degree of integration between the agricultural sector and the food processing industry (FPI). The performance of the FPI and cold storage (CS) sector in the Indian context is thus assessed using Annual Survey of Industries data at the four- and five-digit level respectively. Based on the empirical assessment of the performance of FPI over the period 1998-99 to 2014-15 and that of CS sector from 2003-04 to 2013-14, the study argues that one of the crucial factors behind the worsening structural and technical coefficients for the FPI is the existing capacity gaps in the infrastructural components constituting integrated CC and their lopsided development. The study thus highlights the limitations of the prevailing policy perspective that uses scheme-based incentives for securing private sector participation in the CC sector. Further, it underscores the need for a holistic policy framework and a national blueprint for the long-term development of CC sector given its far-reaching implications for the dynamics of a primarily agrarian rural economy in general, and in promising reasonable returns to the small and marginal farmers in particular.