business opportunity analysis on temperature-controlled ... · 4.2. disconnects inherent within...

1

Research Report

2018.3.16

Frost and Sullivan Japan K.K.

FY2017 Study on business opportunity of High-quality Energy

Infrastructure to Overseas

Business Opportunity Analysis on

Temperature-Controlled Rail Logistics Industry

in India for Japanese Companies

2

Table of Contents (1/6)

Contents Slide#

1. Research Overview and Background 9

1.1. Objectives 10

1.2. Research Scopes 11

1.3. Research Process 12

1.4. Key Information Answered in The Study 13

2. Dedicated Freight Corridor and Logistics Hubs 14

2.1. Dedicated Freight Corridor – Plan and Development 15

2.2. DFCCIL and Indian Railways – Roles and Responsibilities 16

2.3. Dedicated Freight Corridor – Features 17

2.4. The Western Dedicated Freight Corridor (WDFC) 18

2.5. WDFC – Current Status 19

2.6. WDFC – Technical Features 20

2.7. WDFC – Impacts and Benefits 21

2.8. Logistics Hubs – Around WDFC 22

2.9. Logistics Hubs – Features 23

2.10. Salient Facilities of Logistics Hubs 24

2.11. DMIC Multi Modal Logistic Hubs on the WDFC 25

2.12. CONCOR - Inland Container Depots and Facilities Along the WDFC 26

3


Contents Slide#

3. Current Status of the Indian Cold Chain Market 27

3.1. High Disposal Rate of Cold Chain Products 28

3.2. Significant Gaps Exist In The Value Chain 29

3.3. Cold Storage Capacity by State 29

3.4. Volume and Value in Cold Storage by Commodity 31

3.5. Modal Share with Key Products (Rail vs. Road) 32

3.6. Ideal Requirements for Temperature-Controlled Logistics 33

3.7. Challenges in Temperature-Controlled Transportation 36

3.8.Temperature Controlled Market – Forecast Methodology 37

3.9. Forecast Of Temperature Controlled Transport Market 38

4. Challenges of the Indian Cold Chain Market 39

4.1. Challenges in Temperature-Controlled Rail Transportation 40

4.2. Disconnects Inherent within Transportation In the Indian Cold Chain Industry 41

4.3. Insufficient Capacities and Underdeveloped Supply Chains 42

4.4. Common Challenges Across the Entire Value Chain 43

4.5. Voices of Vendors in Cold Chain Market 44

4.6. Consolidation and Growth in Retail Key Trends of the Indian Cold Chain Industry 45

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Contents Slide#

4.7. Indian Customer Perceptions towards Frozen Food 46

5. Local Climate and Technologies in Temperature Controlled Transportation 47

5.1. Climatic Conditions Across India 48

5.2. Major Applications of Temperature Control In India 49

5.3. Key Temperature Controlled Product with Temp-Range 50

5.4. Regulations for Refrigerated Transportation of Vaccines and Other Medicines 51

5.5. Technologies in Temperature Controlled Transportation 52

5.6. Technologies in Temperature Controlled Storage 53

5.7. Technologies in Temperature Controlled Boxes/ Packages 54

5.8. Regulations on Temperature Controlled Transportation Regarding Food Safety and Hygiene 56

5.9. Permission System 57

6. Market Size and Funding Schemes in Temperature Controlled Railway Transportation 58

6.1. Estimation of Costs on Temperature Controlled Transport – Truck, Rail and DFC 59

6.2. Cost Comparison for Temperature Controlled Transport on Truck and DFC 60

6.3. Estimation of Revenue on Temperature Controlled Transport On Western Corridor– All Scenarios 61

6.4. Cash Flow Analysis on Temperature Controlled Freight 62

6.5. Major Government Funding Schemes 63

6.6. Other Schemes 64

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Contents Slide#

7. Cost & Environmental (CO2) Effect Estimation by DFC 65

7.1. Annual Freight Volumes and CO2 Emissions – No DFC Scenario 66

7.2. Annual Freight Volumes and CO2 Emissions – No DFC Scenario 67

7.3. Annual Freight Movement Along WDFC with Scenarios of Modal Shift 68

7.4. Annual CO2 Emissions Along WDFC with Scenarios of Modal Shift 69

7.5. Cumulative Freight Volumes and CO2 Emissions In 2016 to 2040 – All Scenarios 70

7.6. Estimated Penetration of Cold Chain Operations – All Scenarios 71

7.7. Estimation of Specific CO2 Emissions – Road, Conventional Rail and DFC 72

7.8. Annual Temperature Controlled Freight Volumes and CO2 Emissions – No DFC Scenario 73

7.9. Annual Temperature Controlled Freight Movement Along WDFC with Scenarios of Modal Shift 74

7.10. Annual Temperature Controlled CO2 Emissions Along WDFC with Scenarios of Modal Shift 75

7.11. Annual Temperature Controlled Freight Volumes and CO2 Emissions in 2040– All Scenarios 76

7.12. Cumulative Temperature Controlled Freight Volumes and CO2 Emissions in 2016 to 2040 – All

Scenarios 77

7.13. Current Air Quality Index and Projections – No-DFC Scenario 78

7.14. Government Initiatives and Plans to Reduce Air Pollution 79

7.15. National Level Strategy to Address Air Pollution Concerns 80

7.16. Secondary Impact of Air Pollution 81

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Contents Slide#

7.17. Analysis of Effect of Improvement In Environment 82

7.18. Current Air Quality Scenario and Projections – Delhi 83

7.19. Modal Shift to Rail and Environmental Improvement Targets 84

8. Potential, Advantage, Benefit Analysis for Japanese Companies 85

8.1. Growth of Indian Retail Market 86

8.2. Growth of Grocery and Retail Market 87

8.3. Market Size Breakdown 88

8.4. Challenges in the Indian Food and Grocery Industry 93

8.5. Indian Perspectives on Foreign Partnerships 94

8.6. Indian Perspectives on Japanese Companies Entering the Market 95

8.7. Japanese Perspectives on Indian Market 96

8.8. Japanese Perspectives on Indian Cold Chain Market 97

8.9. Barrier to Entry 98

8.10 Expanding Export Opportunity by Cold Chain Growth 99

8.11. FDI Regulations – Railways Infrastructure 101

8.12. Government of India’s Initiative to Facilitate and Expedite Japanese Investments in India 102

8.13. Preferential Incentives towards Japanese Industrial Townships 103

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Contents Slide#

9. Summary 104

9.1. Dairy, Fruits, Meat and Fish Key Products that Can Benefit from the WDFC 105

9.2. What Customers Would Like From The Railways 106

9.3. Summary 107

8

List of Abbreviations

Acronyms Full Name

AAICLAS Airports Authority of India (AAI) Cargo Logistics and Allied Services Company Limited

APEDA The Agricultural and Processed Food Products Export Development Authority

CAG Comptroller and Auditor General

CONCOR Container Corporation of India Ltd

DFC Dedicated Freight Corridor

DFCCIL Dedicated Freight Corridor Corporation of India

DMIC Delhi-Mumbai Industrial Corridor Project

EDFC Eastern Dedicated Freight Corridor

FSSAI Food Safety and Standards Authority of India

GHG Greenhouse Gas

GQ Golden Quadrilateral

IWAI Inland Waterways Authority of India

JNPT Jawaharlal Nehru Port Trust

MIDH Mission for Integrated Development of Horticulture

MoFPI Ministry of Food Processing Industries

MoR Ministry of Railways

NABARD National Bank For Agriculture And Rural Development

NCCD National Center for Cold Chain Development

NHAI National Highways Authority of India

NHB National Horticulture Board

NHM National Health Mission

Ro-Ro Roll-on/Roll-off

SPV Special Purpose Vehicle

WDFC Western Dedicated Freight Corridor

WTW Well to Wheel

9

1. Research Overview and Background

10

§1. Research Overview and Background

1.1. Objectives

In order to make the growth of the Japanese economy sustainable, it is indispensable to capture the demand of

overseas growth markets, and India is one of the key markets. Also, at the Japan-India Summit in September 2014, we

have set the goal of direct investment in India and doubling the number of enterprises by the end of 2019.

As a result of the rapid economic growth in India, freight traffic volume has continued to increase at 15% on YoY, and

the transport capacity of existing rail and truck infrastructure has reached its limit, so the Indian government will take

the tenth and eleventh five In the Year Plan, the Government is planning to develop a mass transit system utilizing

freight dedicated railway (hereinafter referred to as "DFC").

Regarding the West corridor (Delhi-Mumbai) among the DFCs that form the basis of supply chain infrastructure in

India, although the ODA loan is utilized and Dedicated Freight Corridor Corporation of India Ltd. (DFCCIL) promotes

the improvement, cold chain is not well developed, hence distribution in fields such as agricultural products, processed

foods, medicine etc. are challenges. In order to solve these issues, it is possible to contribute to the connection

between agricultural producers and consumers in India and the supply chain of new fields such as foods and

processed foods by introducing Japanese companies’ temperature-controlled rail logistics technologies. We can expect

investment in India in these new fields.

In target area, Global City Haryana and Multi Modal Logistics Hub is planned as part of Delhi-Mumbai Industrial

Corridor (DMIC) project, then DFC is expected that bring synergistic effects with this.

Based on the needs and trends of related offices / institutions etc. of DMIC (hereinafter referred to as "partner country

officials"), a basic investigation necessary for building a cold chain in DFC that combines technology and know-how

that can make use of the advantages of Japanese companies , We aim to analyze the ripple effect on Japanese

companies as well as conduct investigations toward the realization of temperature-controlled rail logistics business.

11


1.2. Research Scopes

WDFC

Figure：http://www.meti.go.jp/report/tsuhaku2009/2009honbun/html/i1240000.html

Country India

Region DFC (West Corridor: Delhi-Mumbai)

Industry Cold Chain Players

Refrigeration technology

company (Rail freight, Reefer,

Storage)

Government (National/ State)

• Rail, Freight

• Food safety, hygiene

• Environment

[Upper]

Production

Process

• Meat, Fish

• Dairy products

• Vegetables, Fruits

• Frozen/Chilled food

[Middle]

Distribution

Delivery

• Warehouse

• 3PL (Intercity)

• Intra-city Delivery

[Lower]

Retails

Food store

• Super market chain

• Convenience store chain

• Restaurant chain

Mumbai

Bangalore Chennai

Kolkata

Delhi

12


Cold-chain Market Analysis

Environmental Analysis

(Legislation, Technology,

Logistics Hubs)

Cost & Environmental

(CO2) Effect Estimation by

DFC implementation

Potential, Advantage,

Benefit Analysis for

Japanese Companies

Government

• Related policy trends

• Roadmap of related

infrastructure

development and

timelines

Government

• Related regulation and

legislation on

temperature-controlled

logistics and products

Government

• Energy policies

• Expectation and target for

DFC about improvement

of air quality level and

CO2 footprint

Government

• Expectation, preferential

policies, and incentives for

Japanese and other

overseas’ companies

Cold-Chain Market • Temperature-controlled

logistics market revenue

size and modal share (by

key product)

• Current situation and

challenges of

temperature-controlled

rail logistics, and those in

truck logistics

• Temp-controlled logistics

market revenue size

forecast (-2020)

Cold-chain Market • Climate environment vs.

Temp-controlled logistics

technology

• Key factors for delivery/

logistics network around

DFC

• Multi-purpose logistics

hub development status

and its impact analysis on

temp-controlled logistics

market (Delhi-Mumbai

area)

Cold-chain Market • Comparative analysis

between trucks and rails

with temp-controlled

logistics

• Delivery time

• Delivery cost

• CO2 emission per

unit freight

• Effect analysis (DFC

to Trucks) about

above factors

Developing possible scenarios of DFC-

utilized cold-chain network Verification of scenarios

Cold-chain Market • Identification of possible market

area to enter and its market

potential size

• Secondary market entry

opportunities after temp-

controlled DFC implementation

for Japanese companies

• Scenario analysis on market

entry potential in ex-India

market with temp-controlled rail

logistics technology

Discussion and Summary

1.3. Research Process

13


1.4. Key Information Answered in The Study

No. Information Area Slide# Answered

1 Possible scenarios for developing cold-chain network 33-36, 43, 105, 107

2 Regulations and legislation trend related to cold-chain by local government 15-19, 79-80, 84

3 Research on temperature-controlled logistics (current) 51, 55-57

4 Market demands for temp-controlled logistics (Based on hearing with Indian/ Japanese companies) 29-30, 38, 71

5 Overview of temp-controlled logistics (Business cost, CO2 emission) 33-36

6 Key factors for delivery network around DFC (including MMLH: Multi-modal logistics hub development

trend)

22-26

7 Effect analysis of technologies utilized with temp-controlled DFC (including advanced insulator/ cooling

pack) under high-temp environment in India

54

8 Quantitative analysis of challenges of Temp-controlled DFC in operation (e.g. Delay, Damages,

Satisfaction level of consignors, Cost)

40-44, 106

9 Estimation of Temp-controlled DFC business size (Revenue (Freight size, Fees) vs. Cost (Operation,

Maintenance, Container-rental fee, Payrolls etc.)

38, 59-63

10 Development progress of related infrastructure and its timeline (Especially, DFC and around DFC

(Invitation companies to industrial park)

22-25

11 Suggestions about financial aid schemes (Private, Public options) 63-64, 101-103

12 Analysis of effect of improve of environment 82

13 CO2 emission reduction effect by temp-controlled DFC compare to trucks (Well-Wheel) 66-70, 72-77, 82

14 Business potential for Japanese companies around DFC 88-100

15 Analysis of advantage of Japanese companies compared to other competitors, and economical

benefits for Japan

94-97, 102-103

14

2. Dedicated Freight Corridor, Smart Cities and

Logistics Hubs

15

§2. Dedicated Freight Corridor and Logistics Hubs

2.1. Dedicated Freight Corridor – Plan and Development

Dedicated Freight Corridor

• In April 2005, under the 10th Five Year Plan, the

Minister of Railways announced the plans for a

Dedicated Freight Corridor along the Golden

Quadrilateral*.

• In October 2006, Dedicated Freight Corridor

Corporation of India Limited (DFCCIL) was

incorporated under the administrative control of

Ministry of Railways (MoR)

o Designing, planning, construction, maintenance

and operation of Dedicated Freight Corridors

were entrusted to DFCCIL

• The DFC is expected to increase capacity and

release existing network for passenger trains thereby

improving punctuality performance for both

passenger and freight trains

• With improved punctuality and capacity, the share of

railway modal freight traffic is expected to increase. Source: Frost & Sullivan Analysis , DFCCIL, CAG, India

Relevant Trends Unmet Needs

• Freight traffic was estimated to

grow at about 5% per year in the

10th Five-Year Plan (2002-07)

• Consistently reducing share of

railway modal freight traffic

movement despite increasing

overall freight traffic

• Deterioration of punctuality and schedule-

reliability of freight trains due to priority to

passenger trains

• Current capacity utilization of the railway

network is around 115-150% leading to

congestion

• The rail network connecting the four

metros and the diagonals are estimated

to carry over 55% of the country’s freight

rail traffic

o This network needs capacity

augmentation to cash in on the

growing freight transportation needs

Dedicated

Freight

Corridor

37.6 72.3 110.7

147.7 235.8

312.4

6.0 14.0 47.7

90.9 145.1

494.0

0%

20%

40%

60%

80%

100%

1950 1960 1970 1980 1990 2000

Mod

al S

hare

in

%

Modal Share of Freight Transport in India, By Ton-

Kilometers

Railways Road

16


2.2. DFCCIL and Indian Railways – Roles and Responsibilities DFCCIL is the ‘Infrastructure Manager’ of the DFC

• DFCCIL is responsible for designing,

planning, construction, maintenance and

operation of the infrastructure of dedicated

freight corridors

• DFCCIL is the “Infrastructure Manager” of

the Dedicated Freight Corridor allowing

non-discriminatory access to Indian

Railways

• Indian Railways is responsible for

upgrading their feeder routes

connecting to the DFC

• Indian Railways has to procure, own,

and operate/run freight trains on the

DFC network

DFCCIL Indian Railways

Infrastructu

re

Rolling

Stock

Revenue

• DFCCIL will not own any rolling

stock or crew

• Indian Railways will own and

maintain all rolling stock and crew

• Indian Railways would utilize the

network by running the trains on DFC

• DFCCIL has no role to play in fixing

of tariffs or collection of revenue

• DFCCIL will be reimbursed by

Indian Railways through a network

usage charge – Track Access

Charge

• Indian Railways is responsible to fix

the tariff and collection of revenue

• The freight revenue as a

consequence of the Freight Train

Operation would be directed to the

Indian Railways

Source: Frost & Sullivan Analysis , DFCCIL, CAG, India

17


2.3. Dedicated Freight Corridor – Features Currently, 3 major cities are being connected through the Dedicated Freight Corridors (DFCs)

WDFC

Eastern Dedicated Freight Corridor (EDFC)

• Connects Delhi and Kolkata, with the end stations planned

near-Delhi and near-Kolkata

• Dankuni, West Bengal (About 25 km from Kolkata) to

Khurja, Uttar Pradesh (About 100 km from Delhi)

• Double track segment of 1,318 km in length

Dedicated Freight Corridor

Delhi

EDFC

Kolkata

Kharagpur

Vijayawada

Chennai

Initiated Projects

Planned Projects

Additional Projects

• The Indian Government has planned to expand the

Dedicated Freight Corridor Project to connect the major

metropolitan and port cities across the country

• The Railway Minister proposed to undertake the following

projects in February 2016

o East-West Corridor (Kolkata-Mumbai) Approximately

2,300 Km

o North-South Corridor (Delhi-Chennai) Approximately

2,300 Km

o East Coast Corridor (Kharagpur-Vijayawada)

Approximately 1,100 Km

• The Preliminary Engineering and Traffic Survey (PETS)

has been completed for the above mentioned projects.

Mumbai

Sources: DFCCIL, Frost & Sullivan Analysis

Western Dedicated Freight Corridor (WDFC)

• Connects Delhi and Mumbai, with the end stations planned

near-Delhi and near-Mumbai

• JNPT, Maharashtra (About 50 km from Mumbai) to Dadri,

Uttar Pradesh (About 50 km from Delhi)

• Double track segment of 1504 km in length

18


2.4. The Western Dedicated Freight Corridor (WDFC)

UTTAR PRADESH

MADHYA PRADESH

MAHARASHTRA

Pakistan

RAJASTAN

GUJARAT

PANVEL

JNPT

VAITARNA

DAHANU SANJAN

VALSAD

SURAT

SANJALI

WADODRA

AHMADABAD

MAKARPURA

SANAD

MAHESANA

PALANPUR

MAHESANA

ABURD

SIROHI

MARWAR

SENDRA

AJMER

PHULERA

RINGAS

NIM KA THANA

ARWAR

PHULERA

REWARI DADRI

WDFC is planned to run through

5 states

Railway Line

DFC Junction STNS.

Existing STNS.

LEGEND

Region of High Business

Impact Due to WDFC

State Length of DFC (km)

Uttar Pradesh 18

Haryana 177

Rajasthan 567

Gujarat 565

Maharashtra 177

Phase Timeline

Rewari-Iqbalgarh (625 km) February 2019

Iqbalgarh-Vadodara (325 km) June 2020

Vadodara-JNPT (425 km) December 2020

Rewari-Dadri (127 km) December 2020

• Requisite Land Acquisition is 100% complete for the

WDFC

• Construction Contracts are awarded for the entire length

– 1504 km

• Tentative Operational Timeline:

Sources: DFCCIL, Google Map, Frost & Sullivan Analysis

Pakistan

India

19


JNPT

VADODARA

SANAD

MAHESANA

PALANPUR

ARWAR

PHULERA

REWARI DADRI

IQBALGARH

SACHIN

2.5. WDFC – Current Status All tenders have been awarded, giving way to about 25% of overall physical construction

progress

Phase II: Vadodra – JNPT

Dadri – Rewari

Phase I: Rewari - Vadodra

LEGEND


Phase Loan

Approved

Loan

Sanctioned

Date of

Sanction

I JPY 346

Billion

JPY 90.26

Billion 31-Mar-2010

II JPY 296

Billion

JPY 136.12

Billion 28-Mar-2013

Current Financial Status

The JICA loan is disbursed

under the Special Terms for

Economic Partnership (STEP)

• Prime Contractor should be

o Japanese Company,

o Joint-Venture (JV)

backed entity should

have a Japanese

company as a majority

stakeholder

OR

o Subsidiary of a Japanese

Company

• At least 30% of the

procurement contracts shall

be awarded to Japanese

companies

Physical Progress

Financial Progress Progress of Funding Disbursal

Progress of Construction Work

45.5%

Physical Progress

42.9%

Financial Progress

5.1%

Financial Progress

3.5%

Physical Progress

2.7%

Physical Progress

5.0%

Financial Progress

20


2.6. WDFC – Technical Features With dedicated tracks and maximum speed of 100kph, reliability of freight train schedule will

improve

Features Existing On DFC

Dimensions

Height 4.265 m 7.1 m for WDFC

Width 3200 mm 3660 mm

Container

Stack Single Stack Double Stack

Train Length 700 m 1500 m

Train Load 5000 Ton 13000 Ton

Design Features

Axle Loads 22.9 Ton/ 25 Ton 25 Ton; Bridges & Formation

- 32.5 Ton

Track Loading

Quality 8.67 Tom/m 12 Ton/m

Maximum

Speed 75 kmph 100 kmph

Curvature Up to 10 degrees Up to 2.4 degrees

Traction Electrical (25 KV) Electrical (25 KV at Feeding)

Station

Spacing 7-10 km 40 km

Signaling Absolute/ Automatic with 1

km spacing Automatic with 2 km spacing

Communicatio

n

Emergency Sockets/ Mobile

Train Radio Mobile Train Radio

Technical Features of WDFC Expected Impact on Business

Reduced Track

Curvature

• Increased Capacity

• Upper Container priced at half the

price of lower container rate –

Lucrative options for users

• Increased Capacity

• Better power and capacity

utilization

• Increased fuel efficiency

• Lower CO2 emission per net ton

• Lower operational costs

• Improved schedule reliability

• Increased fuel efficiency

• Lower CO2 emission per net ton

• Lower operational costs

• Increased speed

• Better stability

• Lower possibility of derailment

Double

Stack

Increased

Train Length

Higher

Axle Load

Higher

Speed


21


18.3%

27.6%

32.0%

10.4% 10.0%

27.5%

10.4% 10.4%

15.9%

0%

5%

10%

15%

20%

25%

30%

35%

0

5

10

15

20

25

30

35

Tota

l (D

ND

ire

ctio

n)

Cem

en

t

Coa

l

Fert

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r

Foo

d G

rain

s

Iron

an

d S

tee

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Pe

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, O

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ts

Sa

lt

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cella

ne

ou

s

Incre

men

t P

erc

en

tag

e (

Fro

m 2

016

-17 t

o

2021-2

2)

Fre

igh

t vo

lum

e (

millio

n t

on

s)

Commodities Traffic on Rail (Million Tonne per Year)

2016-17

2021-22

Growth

2.7. WDFC – Impacts and Benefits Commodities traffic on rail is expected to improve by about 16.3% between 2016-17 and 2021-22

JNPT to DADRI

11.3%

27.3%

10.4% 10.4%

25.9%

10.5% 10.4%

15.9%

0%

5%

10%

15%

20%

25%

30%

0

2

4

6

8

10

12

Tota

l (U

PD

ire

ctio

n)

Cem

en

t

Coa

l

Fert

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Incre

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tag

e (

Fro

m 2

016

-17 t

o

2021-2

2)

Fre

igh

t vo

lum

e (

millio

n t

on

s)

Commodities Traffic on Rail (Million Tonne per Year)

2016-17

2021-22

Growth

31.5%

5.7%

76.1%

0%

20%

40%

60%

80%

0

1

2

3

4

Total (UPDirection)

Single Stack Double Stack

Container Traffic on Rail (Million Containers per Year)

30.5%

2.1%

75.9%

0%

20%

40%

60%

80%

0

1

2

3

4

Total (DNDirection)

Single Stack Double Stack

Container Traffic on Rail (Million Containers per Year)


(No

da

ta)

DADRI to JNPT

22


2.8. Logistics Hubs – Around WDFC Government is encouraging Public-Private Partnership model to develop Multi-modal Logistics

Hubs (MMLHs) to ensure land availability

Stakeholders Responsibilities

Ministry of Road Transport and

Highways − Approval authority

State Government(s) − Facilitation of Land purchase/acquisition

− Facilitation of utility (Water, power, sewerage etc.) supply

Private Entities – Investors,

Developers etc.

− Fund, build, operate and maintenance of the logistics

hubs

− If necessary, outsourcing to third party contractors and

vendor management

Sources: Indiaonthego, Frost & Sullivan Analysis

Multi-modal freight-handling facility that includes mechanized warehouses (non-man

powered), specialized storage solutions, inter-modal transfer solutions among others

and has capabilities to provide value added services

Stakeholders

Definition

Selected

Locations

and Land-

Utilization

Norms

Implementa

tion

The locations for the Multi-modal Logistics

Hubs has been selected based on the following

criteria:

• Proximity to the Consumption/ Production

areas

• Freight flow assessment

• Connectivity requirement

• Availability of land – minimum of 100 acres

Project Initiator -

Central/ State

Government/ Private

Developer

Special Purpose Vehicle

(SPV) with the Project

Initiator and Related

Government Agencies

Equity participation

to be decided by

the stakeholders

Plan, Design

and

Construction of

the Logistics

Hub

50-55% 15-17%

10-12%

10-12%

10-12%

Logistics Hub Utilization Plan, By Area

Core Logistics

Truck Parking

Ancillary Logistics Services

Admin Facilities

Landscaping

23


2.9. Logistics Hubs – Features The government has mandated a minimum of 100 acres per hub to include the necessary services and

features like freight consolidation center, auto park loading facilities and industrial centers

Location State

Delhi – NCR (Delhi,

Gurgaon, Ghaziabad,

Faridabad, Noida)

Delhi/ UP

Mumbai (Mumbai, Mumbai

Suburbs, JNPT, Mumbai

Port, Raigad District)

Maharashtra

North Gujarat (Ahmedabad

and Vadodara) Gujarat

South Gujarat (Surat and

Bharuch) Gujarat

Jaipur Rajasthan

Kandla Gujarat

Pune Maharashtra

Nagpur Maharashtra

Ambala Haryana

Valsad Gujarat

Nasik Maharashtra

Kota Rajasthan

Hisar Haryana

Rajkot Gujarat

Cities with higher priority for Logistics Hub

Development

Core

Capabilities

Road, rail, air

and waterway

connectivity

Open storage,

covered storage,

regulated storage,

Custom clearances to

reduce waiting times.

VAS to further reduce

time.

Mechanized

warehouses and

large storage

spaces to reduce

handling

Dedicated zones for different types of commodities,

cross docking facilities, rail siding area etc. for

efficient freight transfer

Labelling, Packaging, Re-

packaging, Processing,

Reprocessing

Core Service Capabilities and Advantages in the

Listed Logistics Hubs

Advantages

Service Capabilities

List of Proposed Cities for Logistics Hub around

the Delhi–Mumbai Industrial Corridor

Value

Added

Services

(VAS)

Lead time

Reduction

Freight

Aggregatio

n and

Distribution

Services Inventory

Cost

Reduction

Multi-modal

Freight

Transportati

on

Storage and

Warehousing

Sources: Indiaonthego, Frost & Sullivan Analysis

24


2.10. Salient Facilities of Logistics Hubs

Zones Facilities

EXIM Zone Custom clearance support services, R&D/testing Lab, Equipment storage area, Maintenance yard,

Cleaning & disinfectant yard, In house workshop, Truck Terminal - Temporary parking

Container

handling

Equipment

RTG cranes , Reach Stackers, Fork lifts for handling load up to 40 tons , Empty handlers, Truck

Trailer , Tractor Crane

Container/Open

stacking

Designated stacking facility for automobile, construction materials, and import & export goods. ,

Equipment for handling cargo-Reach Stackers ,Fork lifts ,Empty handlers, Truck Trailer, Tractor

Crane ,Parking facility ,Security check points ,Maintenance yard ,Fuel station ,Office spaces &

Amenities for working population

Warehouse

Customized stored based on the products, cold storage, Equipment for handling cargo, Office

space, Fire Fighting system, Amenities for working population, Exclusive road connectivity for each

warehouse, Fork lifts for handling load up to 3-4 tons

Cold Storage

Efficient warehouse design using eco-friendly & recycled materials , Effective Thermal Insulation for

warehouse, Environment and pollution control measure wind screens, Eco-friendly & Energy

Efficient Refrigeration / cooling system for cold storage facility, Waste Heat Recovery System,

Energy Efficient Lighting & Electrical systems, Provision of natural ventilation in warehouse., Fire

Safety in warehouse, Fork lifts for handling load up to 3-4 tons

Scrap Handling

yard

Equipment for shredding & sorting, Weigh bridge, Crane for scrap handling, Vehicles for

transportation and packing & labeling

Sources: DMICDC, Frost & Sullivan Analysis

25


2.11. DMIC Multi Modal Logistic Hubs (MMLHs) on the WDFC

Phase State Location Total Area

in acres

Top Import

Districts

Top Export

Districts

Top Import

Commodities

Top Export

Commodities

Expected

Timeline

Approximate

Value in US$

Billion

1

Uttar Pradesh Dadri (Noida) 1084.16

• Faridabad

• Bagpat

• Dhanbad

• Ghaziabad

• Bhind

• Delhi

• Amreli

• Ghaziabad

• Faridabad

• Dehradun

• Building

material

• Parcels & Misc

• Coal

• Iron & Steel

• Provisions &

household

goods

• Fruits &

Vegetables

• Iron & Steel

• Building

Material

• Parcels & Misc

• Provisions &

household

goods

2018 5

Gujarat Sandand Approx 500

• Nagpur

• Alibag

• Mumbai

• Pune

• Delhi

• Delhi

• Amreli

• Mumbai

• Nagpur

• Pudukottai

• Parcels & Misc

• Iron & Steel

• Provisions &

Household

goods

• Cotton

• Containers

• Parcels & Misc

• Provisions &

Household

goods

• Containers

• Iron & Steel

• Petroleum

products

2018 2.5

Haryana Nangal

Chaudhary Approx 900

• Jaipur

• Delhi

• Gurgaon

• Kota

• Ajmer

• Delhi

• Jaipur

• Gurgaon

• Kota

• Ajmer

• Parcels & Misc

• Building

Material

• Cement

•

Granite/Marbles

• Iron & Steel

• Parcels & Misc

• Building

material

• Provisions &

Household

goods

• Cement

•Granite/Marbles

2018 3.33

2

Madhya Pradesh Pithampur Approx 450 No data No data No data No data 2026 TBD

Haryana Bawal (Rewari) 900 No data No data No data No data 2023 TBD

Maharastra Karmad 125 No data No data No data No data 2025 TBD

Sources: DMICDC, Frost & Sullivan Analysis

26


2.12. CONCOR - Inland Container Depots and Facilities

Along the WDFC

Name of ICD Location State(provinc

e)

Rail ICD with

CFS

Road ICDs

with CFS

ICD with out

CFS

Port Side

Container

Terminal

Empty Park

(Rail Linked)

Tughlakabad(TKD) New Delhi Haryana Yes

Nagpur Nagpur Maharashtra Yes

Agra Belanganj Uttar pradesh Yes

Moradabad Moradabad Uttar pradesh Yes

New Mulund(E) Mumbai Maharashtra Yes

Sabarmati Ahmedabad Gujarat Yes

Kanpur Kanpur Uttar Pradesh Yes

Daulatabad Aurangabad Maharashtra Yes

Jodhpur Jodhpur Rajasthan Yes

Kanakpura Jaipur Rajasthan Yes

Miraje Miraje Maharashtra Yes

Bhusawal Bhusawal Maharashtra Yes

Riwari Haryana Haryana Yes

Dadri(Greater

Noida)

Delhi Uttar Pradesh Yes

Mulund(W) Mumbai Maharashtra Yes

Babarpur Panipat Haryana Yes

Chincwad Pune Maharashtra Yes

Wadi Bunder Mumbai Maharashtra Yes

Vadodara Vadorara Gujarat Yes

D'Node Navi Mumbai Maharashtra Yes

Kandla Kandla Gujarat Yes

Ballabhgarh Uttar Pradesh Uttar Pradesh Yes

ICD - Inland

container depot

CFS - Container

Freight Station Sources: CONCOR, Frost & Sullivan Analysis

27

3. Current Status of the Indian Cold Chain Market

28

§3. Current Status of the Indian Cold Chain Market

3.1. High Disposal Rate of Cold Chain Products Inadequate supply chain facilities contribute to wastage of up to 37 percent of annual Indian

produce

Segments that

use Cold

Chain

Logistics

Fruits & Vegetables

• Less than 3% of farm and horticultural produce goes on cold

chain, As India largely prefers “fresh” not “frozen”

Meat & Seafood

• Insulated boxes with ice used for fish and other seafood items.

• Domestic market is dominated by fresh-butchered meat

Dairy, Processed Food, Beverages

• Dairy has most developed cold chain among commodities

• Smaller consignments norm for processed food + beverages

Pharmaceuticals

• 25% of vaccines go waste due to lack of cold chain

• 11% of the transported value but less than 2% of stored value

Supply /

Procurement

Precooling

Ripening chambers

Storage

Cold Storage

Warehouses

Customer

Retail, Markets

End Users

Transport

Reefer Trucks, Wagons

Reefer Containers

Transport

Reefer Trucks, Wagons

Reefer Containers

Typ

ica

l C

old

Ch

ain

Netw

ork

Flo

w In

In

dia

Source: Frost & Sullivan Analysis

29


3.2. Significant Gaps Exist In The Value Chain High demand in transport flows due to shortage in reefer vehicles; lack of vehicles is dampening

market growth

All India Cold-chain Infrastructure Capacity (Assessment of Status and Gaps), 2015

9.3%

85.4% 91.1%

99.6%

0%

20%

40%

60%

80%

100%

0

20,000

40,000

60,000

80,000

100,000

Cold Storage Reefer Vehicles Ripening Chamber Pack House

Ga

p (

Sh

ort

ag

e)（

%）

Fa

cili

ty/ F

lee

t (u

nit)

Demand Installed Gap

Sources: NCCD, Frost & Sullivan Analysis

*Unit in Cold Storage: 1,000 tons

• As the cold chain market expands, the immediate need is in reefer vehicles. Over ~90% of the market is highly

fragmented having operators with less than 5 vehicles. The largest organized reefer logistics participants average

between 70-100 in fleet size. Almost all logistics providers want to increase fleet size to meet demand.

• Capacity of the pack house hardly meets its demand with covering merely 0.4% of that.

30


3.3. Cold Storage Capacity by State Cold storage capacity under national average in almost all states other than UP, Bihar,

Chhattisgarh, and West Bengal

State-wise Distribution Of Cold Storage Capacity, India, 2017

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Uttar

Pra

desh

West B

engal

Guja

rat

Pu

nja

b

AP

& T

ela

ngana

Bih

ar

Ma

dhya P

radesh

Ma

hara

sh

tra

Hary

ana

Ka

rnata

ka

Raja

sth

an

Orissa

Chhattis

garh

Ta

mil

Nadu

Jha

rkhand

Uttra

khand

Assam

Him

achal P

radesh

Delh

i

Capacity p

er

Cold

Sto

rage (

1,0

00 tons)

To

tal C

apacity in

(m

illio

n tons)

Total Capacity

National Average of Capacity per Cold Storage

State Average of Capacity per Cold Storage

• 95% of cold storages in the country are owned by private sector, 3% by cooperatives and remaining 2% under

Public Sector Undertakings.

• As of 2017, there were 7,645 cold storages with a capacity of 34.95 million tons in India

Sources: PIB, Frost & Sullivan Analysis

31


3.4. Volume and Value in Cold Storage by Commodity Multi purpose storages have much lesser installed capacity but handle much greater value of

goods

Estimated Volumes In Cold Storages by Commodity,

India, 2017

Potatoes, 66%

Multi-purpose, 32%

Meat and Fishery, 1% Other, 1%

Estimated Value In Cold Storages by Commodity,

India, 2017

Potatoes, 16%

Multi-purpose, 78%

Meat and Fishery, 2%

Other, 3%

* Multi purpose storages include retail frozen items, pharma

products, other vegetables, dairy, packaged food etc.

Sources: Indiastat, Yes Bank, NCCD, Frost & Sullivan Analysis

• Almost 70% of all cold storage handling volumes were traditionally catered to potatoes.

• There is a clear shift towards multipurpose storage, and value added services covering end to end requirements.

• Volume in multipurpose storages expected to grow at a CAGR of 6-8% in 2017-2022.

• Multipurpose cold storages have high utilization levels of approximately 80%

32


3.5. Modal Share with Key Products (Rail vs. Road)

Top Commodities Moved By Rail and Road, India, 2015

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

50

100

150

200

250

300

350

Rail R

atio（

%）

Fre

ight

Volu

me (

100 m

illion t

ons)

Rail Road Rail Ratio

Sources: NCCD, Frost & Sullivan Analysis

• Rail primarily caters to inorganic freight commodities. Any organic material that is moved at present is largely dry

• Dedicated cold chain absent from rail freight operations, most customers use insulated boxes on parcel vans

attached to superfast or express passenger trains

33


3.6. Ideal Requirements for Temperature-Controlled Logistics There should be no disconnects or gaps in the cold chain, the transfer of goods must be

seamless and without temperature shocks

• Proximity to Pack-houses within 4

hours of harvest

• Multi-utility chambers within each

pack-house

• Proximity to processing centers

• Standardized packaging protocols

• Stable power supply

• Multi-utility chambers within cold

storages to ensure capacity

utilization despite seasonality of

produce

• Multi-modal logistics hubs with

custom clearance services

• Local reefer container

manufacturers

• Stable power supply

• Remote sensors and diagnostics for

real-time tracking and disaster

management

• Proximity of distribution centers to

the consumption centers

• Cross-docking at distribution centers

to minimize handling

• Cold storage at retail stores for

perishables

Other Requirements

Cold Storage

Distribution Center

Sources: Primary Research, Frost & Sullivan Analysis

Production Centers Wholesale and Long-Haul

Transport Distribution Last-Mile Delivery

Freezing

(meat), Sorting,

Grading, Pre-

cooling (Fruits ,

Vegetables)

and Packaging

Primary

Packaging

Centers,

Aggregators and

Transportation

Loading Docks for

seamless handling

Aggregation from different

Production Centers;

Controlled-Atmosphere (CA)

rooms for Storage; Ripening

Chambers etc.

Loading/ Unloading

Docks for Produce

Transfer

Multimodal

Logistics Hubs Remote Sensors

and Diagnostics

Small Reefer

Container

Trucks

End-

Consumer

Temperature-controlled

trucks for distribution and

last-mile delivery

Retail Store

Temperature-

controlled trucks

with flexible

capacity

Multiple

refrigeration

units for

different food

products

Cross-Docking

34


3.7.1. Challenges in Temperature-Controlled Transportation (1/3)

Production Centers

Loading Docks

for seamless

handling

Challenges Impact

Factors Truck Train

Low

Quantity of

Perishables

• Lack of aggregation at the

production centers

o Low volumes generated

per farmer/ production

unit

• Low volumes of produce

generated by individual

farmers or production to be

viable for rail transportation

Increased cost per

unit of consignment

transported

Cold Chain

Compliance

• Lack of skilled labour

• Lack of awareness of cold

chain compliance leading

to erratic cold chain

parameters

• Lack of supporting rail

infrastructure and labour for

handling perishables at

terminals

Lack of Cold Chain

Compliance

Price

Sensitivity

• High level of price

sensitivity at the production

grass root levels

• Lack of awareness about

handling and transportation

cost advantages

Lack of Preference

for Cold Chain

• Indian 3PL Company (A) –” In terms of mindset shift, there is a feeling that using a reefer truck is 8-10 rupees extra per kg on banana, or on the produce harvested, and to bring that awareness was quite a task, or perhaps it is still a task for the Govt. There is a huge mismatch between the private sector, and the production centers, next being the farmers. The major challenges the fresh verticals / produce faces when it is being transported in the train is the kind of packaging that we can do to transfer it into the train”

• Indian 3PL Company (B) – “We have seen a lot of debits coming in from ice cream industry; these companies have a target of debiting

the transporter, so every single transporter get s debit of 15,000 -25,000 USD/ year whether or not the product is managed or not. There

are a lot of factors which influence that. During loading they don’t give us a proper temperature, the drivers are not very educated to check

the leakage or what the temperature is. So they make use of that fact and load products that are at a low temperature. “

Industry Speak

Freezing (meat),

Sorting, Grading,

Pre-cooling

(Fruits,

Vegetables) and

Packaging

Primary Packaging

Centers,

Aggregators and

Transportation


35



Wholesale and Long-Haul

Transport

Aggregation from different

Production Centers; Controlled-

Atmosphere (CA) rooms for

Storage; Ripening Chambers etc.

Loading/

Unloading Docks

for Produce

Transfer

Multimodal

Logistics

Hubs

Cold

Storage

Challenges Impact

Factors Truck Train

Consignment

Handling

• Lack of skilled labour

leading to potential

temperature shocks

to perishables

• Lack of standardized

packaging protocol

and pallet sizes

• Lack of mechanized

handling

• Increased points of handling

leading to potential

temperature shocks to

perishables

• Lack of rail-side terminal

infrastructure for temporary

storage

• Lack of standardized

packaging protocol and pallet

sizes

• Lack of mechanized handling

Increased

Damage

and Food

Wastage

Transportation

Capacity

Availability

• Acute shortage of

reefer trucks across

the country

• Lack of awareness among

stakeholders to use rail

capacity – rail schedules,

liaison etc.

• Lack of rail freight forwarding

entities in the market to

aggregate demand

Inefficient

utilization of

transportation

capacity leading

to increased

costs

Industry Speak

• Indian 3PL Company (C) –” We are already using rail mode through a JV. This issued mostly for bulk movement, We ideally use rail

when the distance is greater than 1,500km. With rail, the lead time increases, for example Delhi- Bangalore by truck takes 4 days, the

same by rail takes 6-7 days. There is also a power supply mismatch between railway networks between southern railway , western

railways etc.”

• Indian Warehouse Company (D) – “Railways has a few of those refrigerated vans but not much has been done, the industry in some

particular circuit is from Bangalore to some location, but you have only 7 or 8 refrigerated wagons that are being moved. “


36



Distribution

Remote

Sensors and

Diagnostics

Distribution

Centers

Small Reefer

Container

Trucks

Temperature-

controlled trucks for

distribution and last-

mile delivery

Cross-Docking

Challenges Impact

Factors Truck Train

Real-time

Tracking

and

Diagnostics

• Lack of remote sensors in

most trucks

• Lack of real-time data

availability

• Lack of diagnostics and

timely maintenance

• Lack of consignment

visibility during transit

• Lack of reliable operating

schedules leading to

cascaded delays

• Lack of supporting terminal

infrastructure in case of

delays

Delayed availability

of cold chain

parameters

information if any

Potential wastage

due to cold chain

incompliance

Distribution

-based

Transportati

on

• Shortage of low volume

reefer trucks

• Lack of data availability for

effective planning – utilize

reverse haul capacity

• Lack of Cost-Effective

Refrigeration Solutions to

accommodate Indian

Climate

• Lack of Terminal

infrastructure to manage

Cold Chain Consignments

• Lack of Multimodal Cold

Chain Distribution Hubs

near Consumption Centers

Ineffective

utilization of

transportation

capacity

Lack of Cold Chain

Compliance

• Association (E) –” So for a large market like India, having only 17 companies operating refrigerated containers on rail makes it a

small number to reach out, that is one of the challenges. Another challenge when is about reefer containers, there are different types like

chilled, frozen etc. and not all commodities can be put on chill, and frozen, that is a bottleneck right now, and It gets compounded with lack

of awareness of the drivers, and operators themselves having to understand what can be moved only on chill, and on frozen”

• Dairy Foods Company (F)– “Right at the first stage there is a challenge, refrigerated vehicles, their quality, compliance, what are

they used for, it’s very difficult to get the right infrastructure right at the first stage. As they move lower into the cold chain, towards the last

mile it becomes further more complicated. We also do not have comprehensive training that we can actually give to the people across the

cold chain, to go about handling product, and with the cold chain compliance requirements “

Industry Speak


37


3.8. Temperature Controlled Market – Forecast Methodology To

tal R

eve

nu

e T

em

pe

ratu

re

Co

ntr

olle

d L

og

isti

cs

Ma

rke

t In

In

dia

Temperature Controlled Storage

(TCS)

Pack Houses

Cold Storages and Hubs

Ripening Units

Temperature Controlled Vehicles

(TCV)

Reefer Vehicles

Reefer Containers

Insulated Boxes and Containers

Start

All services

offered within

TCV and TCS

Identify growth factors

from statistical

modeling

Identifying historical

market size of the

components

Identified through

primary and

secondary

sources

Identify largest

components of the cold

chain in India

Finalize forecasts

Identify

estimated growth

rates from

primary research

Build forecasts Validate

forecasts with

primary research

Revenue Forecast Logic Flowchart Revenue Sources and Stream

Sources: NCCD, Yes Bank, Frost & Sullivan Analysis

38


3.9. Forecast Of Temperature Controlled Transport Market Temperature Controlled Logistics in India will reach $7.91 Billion by 2021 at a CAGR of 14.8% (2016-2021)

Forecast of the Indian Temperature Controlled Market, India, 2009-2021

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

TCV (Truck) 0.12 0.14 0.15 0.17 0.20 0.22 0.25 0.28 0.33 0.38 0.45 0.52 0.61

TCS (Storage) 1.44 1.64 1.87 2.13 2.43 2.79 3.20 3.67 4.21 4.83 5.55 6.36 7.30

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Mark

et

Rev

en

ue (

billio

n U

SD

)

TCV (Truck) TCS (Storage)

• The storage segment will continue to see investment due to the influence of subsidies on cold storages and cold

storage equipment.

• Consolidation and organization within the transport operators coupled with heavy demand for reefers will drive the TCV

segment. At present reefers are estimated to transport 4-5 million tons per year in India

Sources: NCCD, Yes Bank, Frost & Sullivan Analysis

CAGR 2009-2015 2016-2021

TCS 14.2% 14.8%

TCV 12.9% 17%

Total 14.1% 14.9%

39

4. Challenges of the Indian Cold Chain Market

40

§4. Challenges of the Indian Cold Chain Market

4.1. Challenges in Temperature-Controlled Rail Transportation Lack of Standardization and Disconnect between the stakeholders are major challenges

Interest

levels

Revenue

Potential

Technolo

gy

Market Penetration of Required

Technologies

• Refrigeration, Insulation requirements

far from becoming standard across all

segments, due to extreme price

sensitivity in India

Installation Challenges

• Fleet-wide installation

• Funding and partnerships

• Lack of clarity on who will be system

integrator

Uncertainty About Mixed-interest

Levels

• Potential to increase value in doubt

• Performance in real world situations

• “If-it-is-not-broken-why-fix-it?” attitude

common in Indian operations

Revenue Potential

• Convincing participants about returns

on investment despite reduced

wastage

Existing Facilities

• Legal aspects of cold chain still to be

proposed formally

• Insurance and litigation structure still

in unfamiliar territory

Agreeing on Standards Across Several

Aspects

• Interoperability between stakeholders

• Truck / Facility certification for Cold

Chain

Business Models to Choose From

• Different rate per class or weight

• Charge by the hour

• Charge by usage

• Subscription model or one-time cost

Technology

• Perceived as extremely advanced

technology with the potential to

cause apprehensions in early

adoption by stakeholders


41


4.2. Disconnects Inherent within Transportation In the Indian Cold

Chain Industry

Misplaced Investment

• 90% of investment in the next 5 years is expected to be in

temperature controlled warehouses, not in vehicles

• Temperature controlled vehicles are not being invested in as

the participants feel that the ROI is unjustified

Mismatch between equipment, market and product

• Truck sizing not considered important, and trucks often built for

one product/ segment, When segment fails or due to

seasonality, fleets are left with non performing assets

• Right equipment unavailable domestically, importing

components increases cost and lead time, and production is

delayed

Lacking Specific Cold Chain Expertise and Qualification

• Participants entering market after seeing opportunity but

without experience.

• Purchase of wrong truck / reefer box, starts transporting,

destroys cargo and faces penalty from client → Early shut

down & exit from market

No prioritization of financial facilities towards Cold Chain

• Cost of financing cold chain components which goes into a

trucking vehicle, is higher than the cost of the basic chassis of

the vehicle.

Driving Community – Unskilled and Scarce

• Training, risk handling, skill development largely non existent

• Usual transporting company pays only 4-5% of overall

transport cost as compared those of in USD/EU:30-45%. The

reefer truck driver’s wage is not so attractive. Sources: Primary Research, Frost & Sullivan Analysis

42


4.3. Insufficient Capacities and Underdeveloped Supply Chains Estimated To Contribute To Rs. 90,000 Crore Food Wastage Per Year

Most cold chain customers import

refrigerated reefers / boxes as they are

largely dissatisfied with the domestically

manufactured reefers/boxes. Importing is

expensive and hence market is hesitant

Most cold storages located close to

manufacturing, major cold storages in

the downstream supply chain and in the

last mile lacking

Huge supply demand gap in various

states is moving the market towards

multi storage warehouses where ROI is

quicker

Growth of retail and ecommerce has

increased demands on the already

stressed cold chain, services in last

mile is estimated to be a huge market

almost all of which is still untapped.

1

4

3

2

Reefers /

Boxes

Downstream Cold

Chains

Multi storage

Warehouses

Last mile integration


43


4.4. Common Challenges Across the Entire Value Chain

Primary / Upstream

Factories to Depots

Secondary / Middle

Depots to Distributors

Tertiary / Downstream

Distributors to Market

Temperature

Compliance

Temperature shock to

consignment at

transition of every stage

High control at the

factory,

But challenges exist

once vehicle leaves

factory.

Often right infra not

available at the first

stage

No visibility of

temperature after the

product is delivered to

depot.

No information of delta

T when product is

transferred

Extremely challenging

to ascertain compliance,

further complications

due tropical climate,

lack of regulations,

negligence, apathy

Skilled Labor

Minimal understanding

of standard operating

procedures

Most training effort

given at the factory

level, primary

transporters have low

degree of training

No visibility of

handling practices,

methods of handling

the product by

workers

（Same as left)

Equipment Used

Required temperature

ranges not understood ,

same equipment used

for all

Equipment according to

required specifications

used

as much as possible

Most often generic

refrigeration/insulation

equipment used, no

adherence to temp

ranges

（Same as left)

Electricity and Power

Continuous supply of

power to refrigeration

equipment often

unavailable

Low visibility on

powered temperature

compliance and running

of reefer units in

primary transporter

No visibility on

powered temperature

compliance and

running of reefer units,

storage etc.

No visibility on powered

temperature compliance

and temperature of

distribution insulated

boxes

Impact on wastage of product Low Mid High Sources: Primary Research, Frost & Sullivan Analysis

44


4.5. Voices of Vendors in Cold Chain Market C

old

Sto

rag

e E

qu

ipm

en

t M

an

ufa

ctu

rer • “We can see

warehouse customers complain about the 6- 7 years ROI. No mindset that views the money that they spend on cold storage is actually going to save them wastages. Our customers are extremely price sensitive and there is stiff

competition for ”

Cold

Sto

rag

e W

are

hou

se

• “We failed to get a partner who could match requirements in terms of efficiency and costs to get to the stores in the right condition, so we went back to traditional distributors. Large operators have big brother attitudes and don’t care for the product, too often there is temperature

abuse.”

Cold

Ch

ain

Tra

nsp

ort

• “Often we are not able to recover the fixed costs, sometimes we average 6,000km a month where the international average is 20,000km. We earn nothing when the truck stands for loading , unloading. Often we are held hostage by non paying customers who hold back on

payment(credit)”

Gro

cery

Reta

iler • “Ideal would be to

have partners who have infrastructure to ensure last mile delivery to retail stores across the country. Someone who replaces a distributor, because there is a lot of abuse in terms of temperature, and in terms of handling. The consumer stops buying when there is a difference in taste/sensorial

experience”


45


4.6. Consolidation and Growth in Retail Key Trends of the Indian

Cold Chain Industry

Organized

participants

International

Standards &

Regulations

MNCs &

Compliance

Retail growth

Outlook Impact on

Growth

Expected Outcome

• At present, 91% of the companies

in this industry are unorganized, the

industry is moving towards

consolidation either for contracted

services or for captive needs

Customers will start to

focus on the core areas,

logistics becomes

important not primary

focus

• There has been neglect in terms of

setting basic regulations, within

various customer segments (only

pharma has regulations at present)

• Government to lay framework for

local regulations to be compatible

and at par with to international

regulations/standards

Increase in proliferation

of companies from

sectors that operate on

standards such as

QSRs, dairy, meat,

packaged food

companies restaurant

chains

• Current compliance is only seen as

a paper formality; current market

view that certification is only on

paper.

• The more MNCs keep pushing for

certifications, domestic market will

start falling in line with regulation

compliance

Number of MNCs who

are in dairy sector ,

processed food

manufacturing, QSRs is

expected to increase –

direct increase of

potential customers for

cold chains

• The key drivers are imports/exports

on exotic vegetables & fruits, the

requirement for cold storage is

going to be on an upturn

• Organized retail is improving +

growing by 18-20%, which will drive

the cold chain market

Logistics players will

start to look into smaller

silos to adapt to new

fulfillment models built

around last mile supply

chains

High

Mid

Mid

Very High


46


4.7. Indian Customer Perceptions towards Frozen Food

Perception on Health • Indian consumers

believe that frozen

food is unhealthy, due

to the presence of

chemical

preservatives and

having less nutritive

value.

No Fresh Alternative • Indian consumers

prefer to use frozen

food only when fresh

food is not available

and do not see it as a

substitute to home

cooked or restaurant

food

Changing demographics

• About 76% of the

nuclear families feel they

have less time to spend

in the kitchen due to the

rise in the number of

women in the workforce

Ready to eat popular • Foods in retort

packaging where the

food is undercooked

and packed in plastic

metal pouches

favored over frozen

meals/food

Perception on

Hygiene • Perception of lack of

hygiene in Indian meat

markets among

millennial who instead

turn towards the super

marts, but market

nascent

Indian foods preferred • Frozen Idlis and Parathas

are the most preferred

frozen food.

• Minimally processed

products favored over

specialty products

Sources: Primary Interviews, Frost & Sullivan

47

5. Local Climate and Technologies in

Temperature Controlled Transportation

48

§5. Local Climate and Technologies in Temperature Controlled Transportation

5.1. Climatic Conditions Across India

Sources: Frost & Sullivan

Northwest • Hot desert

• Dusty and dry

• Cool mild winters

Mid Northwest

• Semi arid climate

• Warm dry summers

• Wet spring, autumn and winter

South West

• Tropical wet

• Heavy precipitation

• Hurricane prone

• Perennial thunderstorms

South East

• Tropical oceanic climate

• Humid summers

• Wet monsoon winters

• Semi arid towards central

column from Kanyakumari

towards Maharashtra

Gangetic Plain

• Humid Subtropical

• Heavy precipitation

• Summer monsoon

rain

Himalayan North

• Mountain

• Arid, frigid

• Snowfall

49


5.2. Major Applications of Temperature Control In India

Product Category Maximum

Storage Time

Frozen (less than

-18°C) Chill (0 to 10°C)

Mild Chill (10 to

20°C)

Normal (more

than 20°C)

Description

Products that need

extreme cold to

protect from

microbial and

enzymatic

processes

Majority of fruits

and vegetables,

fresh meats, fish,

dairy and

pharmaceutical

goods

Mostly used for

sub-tropical fruits

to be stored just

cooler than

ambient

temperature

Uncontrolled

storage and

handling at

ambient and does

not need cold chain

equipment

Horticulture (Fresh

Fruits & Vegetables)

Few days to

several months ✔ ✔ ✔

Floriculture (Fresh

Flowers)

Few days to

weeks ✔ ✔ ✔

Dairy Products -

Milk, Ice-cream,

Butter

Few days to

weeks ✔ ✔

Meats, Fish, Poultry Several weeks to

months ✔ ✔

Processed Food

Products

Several weeks to

months ✔ ✔ ✔ ✔

Pharma, Life

Sciences,

Chemicals,

electronics

Several weeks to

months ✔ ✔ ✔ ✔


50


5.3. Key Temperature Controlled Product with Temp-Range Majority Of Food Consumed In India Falls In The Chill (0 To 10°C) Range

DSRC = dedicated short range communications


Apricots

Avocado

Asparagus

Beans

Beet root

Broccoli

Black berry

Cabbage

Carrots

Cauliflower

Cherries Cucumber

Eggplant

Lemons

Grapes

Frozen Meat and fish

Lime

Mango

Orange

Potato

0 5 10 15 20 >20 -5 -10 -15 <-20

<1 week

<1 month

>1 Year

<6 months

Apples

Ice cream

Processed Foods

Frozen Vegetables

Banana

Papaya

Butter

Onions

Pharmaceuticals

Product Holding Life

Temperature in °C

Dried Foods

RTE Foods

Lemons

Milk

Eggs

Butter

Chocolate

51


5.4. Regulations for Refrigerated Transportation of

Vaccines and Other Medicines

Description

Technical Particulars

Large Truck Small Truck

Temperature range (+) 2oC to 8oC

Capacity of storing vaccine Minimum 32 m3 Minimum 20 cum

Outer panel – roof and side walls Minimum 1 mm CR sheet bonded with insulation

Inner panel – side wall and ceiling Minimum 0.3 mm stainless steel bonded with minimum 6mm marine grade ply wood. All joints should be sealed with a good quality sealants and

fastened with SS screws.

Foam density Minimum PUF 30 Kg/m3

Thickness of insulation Minimum 100 mm for side walls and 120 mm for roof and floor

Insulation thermal conductivity Maximum 0.02 5w/moK

Hold Over Time The container should hold the inside temperature at least for four hrs at the ambient temperature of 43oC when it is not opened.

Unit installation The refrigeration unit is installed on the body above the cabin of the vehicle and gives a range of temperatures. The unit should be powered by

self propelled truck engine. It should have suitable sized compressor, evaporator and control switches along with voltage stabilizer.

Temperature The temperature variation is from +2 deg Celsius to +8 deg Celsius

Temperature recording

The temperature is digitally displayed and recorded by the use of data-logger with an accuracy of +/- 0.5oC . The sensor should be placed inside

the vaccine chamber and the recording should be displayed in the cabin.

It should be an electronic device placed in closed camber of vaccine truck, which records the vaccine temperature after loading of the vaccine,

during traveling till it is unloaded. The minimum capacity of storing the data in data logger should be of 7 days. It should be an alarm system and

as soon as the vaccine temperature crosses the safe range alarm alerts the handlers.

Stand by motor

A single phase stand by motor with a extension lead of 20 meters should be provided which should be powered by external electricity source;

this electric motor will drive the compressor to maintain internal temperature at the desired level during extended stops and for pre-cooling the

vaccine chamber.

Source: ITSU, Frost & Sullivan Analysis

52


5.5. Technologies in Temperature Controlled Transportation

Telematics &

Fleet

Management

Refrigeration

Units

Phase Change

Materials

Body and

Insulation

Materials

Performance In

India

Market

Satisfaction

• External Body: MS Corrugated, GRP sandwich,

Aluminum

• Internal Body: Food grade SS, GRP, , Aluminum

• Insulation: Polyurethane foam(PUF)

• Floor: GRP, Aluminum, SS in T or checkered plate

profile

• Power: Diesel, electric

• Refrigerant: R-404a, CO2 yet to enter

• Condenser: Front Mounted

• Evaporator: Standard, slim profile

• Standby: Electric

• Capacity: Rating at 30°C ambient under ATP

standard (Participants feel units for India need to be

designed at 40°C ambient)

• Temperature : Data logging, telemetry

• Functionalities : Basic Track and Trace

• Eutectic plates from Italy, France

• Seen favorably in first and last mile

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Legend: Blue: Average Indian Operating Temperatures, Yellow: High Indian Operating Temperatures

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Technology is new to market , not enough experience at present


53


5.6. Technologies in Temperature Controlled Storage

Cold Storage

Structure

Cold Storage

Refrigeration

Pack Houses

Performance In

India

Market

Satisfaction • Sorting: Manual, computer vision systems non

existent

• Grading: Manual, computer vision systems non

existent

• Washing / Drying: Mechanized

• Packaging : Manual packaging

• Compressors: Screw, scroll, reciprocating

• Refrigerant: Ammonia, R-404a

• Automation: PLC controller

• Individual Quick freezing: Straight, spiral

• Insulation: Polyurethane foam (PUF)

• Materials : SS, GI, Aluminum

• Materials : Pre painted galvanized steel with

fabricated sandwich panels

• Insulation: PIR/ PUR

• Functionalities : Basic Track and Trace

• Doors: Non corrosive non metallic components

• Flooring: Bituminous felt, PCC, Altro vinyl,

Aluminum , SS

• Covings: Food grade PVC

• Electricals: Polycarbonate covers, weather

proof switches

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Legend: Blue: Average Indian Operating Temperatures, Yellow: High Indian Operating Temperatures Source: Frost & Sullivan Analysis

54


5.7. Technologies in Temperature Controlled Boxes/ Packages

Temp.

controlled

boxes

Advanced Insulator/ Cooling

Pack (Gel Ice Packs)

• Casing: HDPE bottles, LDPE

pouches, Foam bricks

• Gel: propylene glycol,

Hydroxy Ethyl cellulose, vinyl

coated silica gel

Vaccine Carriers

• Casing: Food grade HDPE

• Lining: Food grade HDPE

• Insulation: PUF

• Cold sources: Gel pack

inserts

Temperature Controlled

Shippers

• Casing: Corrugated

cardboard

• Lining: Molded polystyrene

• Insulation: Molded

polystyrene

Food boxes

• Casing: Expanded

polystyrene

• Cold sources: None or Gel

packs

Performance In

India

Market

Satisfaction

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Low High

1 5 2 3 4

Legend: Blue: Average Indian Operating Temperatures, Yellow: High Indian Operating Temperatures Source: Frost & Sullivan Analysis

55


5.8.1. Regulations on Temperature Controlled Transportation

Regarding Food Safety and Hygiene (1/2)

Factors Sub-Factors International Standards Indian Guidelines FSSAI Regulation

Storage,

Transportation

and Receiving

Temperatures for

food

Potentially

Hazardous Food

Products

Less than 7ºC Less than 5ºC

Food Safety and Standards (Licensing and

Registering of Food Businesses), Regulations

– 2011. Part III, Section IV

Chicken Less than 4ºC Less than 5ºC




Eggs Less than 20ºC Between 10º - 20ºC




Pastry and

Confectioneries Less than 7ºC No Specifications




Fruits and

Vegetables Requisite Temperatures Requisite Temperatures




Frozen Food

Products Less than -15ºC Less than -18ºC




Food Product Pallets

• Food products should be at least

15 cm above the floor; 60 cm

below the ceiling and 15 cm away

from adjacent wall

• No specified height and distance;

• Food materials should be stored

on racks – considerably away

from walls and above the floor to

facilitate ventilation and

prevention from pest-infestation



– 2011. Section V


56


5.8.2 Regulations on Temperature Controlled Transportation

Regarding Food Safety and Hygiene (2/2)

Factors Sub-Factors International Standards Indian Guidelines FSSAI Regulation

Labeling

Requirements

Contents

Label with the following

information should be included:

• Ingredients

• Quantity

• Nutritional information

• Artificial Colours and

Preservatives

• Name and Address of

Business

• Major Food Allergens

Label with the following

information should be included:

• Ingredients

• Quantity

• Nutritional information

• Artificial Colours and

Preservatives

• Name and Address of

Business

• Major Food Allergens

Labels should include the

following:

• Green Square with dot inside

for vegetarian food products

• Brown Square with dot inside

for non-vegetarian products

that include meat, seafood

and egg.

Food Safety and Standards

(Licensing and Registering of

Food Businesses),

Regulations – 2011. Clause

9, Section VI

Dates and

Timeline

• Date of Manufacture and

Expiry

• Date of Manufacture and

Expiry

Food Safety and Standards

(Licensing and Registering of

Food Businesses),

Regulations – 2011. Clause

9, Section VI

Source: FSSAI, Frost & Sullivan

57


License Type Criteria for Food Transporters Criteria for Cold Storage Entities Approving Authority

Central

License

• Fleet with over 100 Vehicles/ Wagons OR

• Annual turnover more than ₹300 million

• Chill and Mild-Chill Storage

o Capacity more than 50,000 MT

• Frozen Storage


• Frozen and CA Storage


Food Safety Commissioner, FSSAI

(Appointed by the CEO, FSSAI)

State License • Fleet with up to 100 Vehicles/ Wagons OR

• Annual turnover up to ₹300 million

• Chill and Mild-Chill Storage

o Capacity up to 50,000 MT

• Frozen Storage


• Frozen and CA Storage


Food Safety Commissioner for the State/ Union

Territory, FSSAI

Registration

License • Annual turnover up to ₹1.2 million

• Frozen, Chill and Mild-Chill Storage – Annual

turnover up to ₹1.2 million

Food Safety Commissioner for Local

Panchayat/ Municipal Corporation

Eligibility Criteria

5.9. Permission System Temperature Controlled Transportation and Storage for Food Safety and Hygiene

Source: FSSAI, Frost & Sullivan Analysis

License Application Document with the following

supporting documents to the Approval Authority

within FSSAI based on the Eligibility Criteria:

• List of Director(s)/ Partner(s)/ Proprietor(s) of

the Company

• Partnership Deed

• Supporting Document for Turnover/ Self-

Declaration of Number of Vehicles

Licensing

• Submission of Application and Documents to

Central/ State/ Local Municipal FSSAI Approval

Authority

• Registration License Application to be filled

before Operations

• Subsequently, with increase in revenue, fleet

and storage capacity, application for state/

central license

Submission

Operations

Permission Process

58

6. Market Size and Funding Schemes in

Temperature Controlled Railway Transportation

59

§6. Market Size and Funding Schemes in Temperature Controlled Railway Transportation

6.1. Estimation of Costs on Temperature Controlled Transport –

Truck, Rail and DFC

Estimated Cost Breakdowns For Temperature Controlled Transport on Truck, Rail and

DFC, India,2016

Sources: Indian railways, DFCCIL, Frost & Sullivan Analysis

Truck Operating

Costs per Tkm % of Total Cost

Operating Cost

INR Per Tkm

Vehicle and Equipment Costs

Fuel Costs 45% 21.6

Truck/Trailer Lease

or

Purchase Payments

16% 7.7

Repair &

Maintenance 15% 7.2

Truck Insurance 4% 1.9

Premiums

Permits and

Licenses 5% 2.4

Tires 5% 2.4

Tolls 3% 1.4

Driver-based

Driver Wages 5% 2.4

Miscellaneous 2% 1.0

Total Cost per Tkm 100% 48.00

Rail Operating Costs

per Tkm

Conventional

Rail

INR Per Tkm

DFC

INR Per

Tkm

%

Change

Rail Operations

Crew wages 2.45 3.05 25%

Fuel 7.35 3.29 -55%

Other train expenses 1.84 1.06 -42%

Other operation

expenses 10.33 4.23 -59%

Equipment Maintenance

Locomotives 4.90 3.29 -33%

Containers 3.80 2.58 -32%

Maintenance of Track and Structures

Track and roadway 9.51 5.63 -41%

Other structures 0.65 0.35 -46%

Total Cost per Tkm 40.83 23.48

60


6.2. Cost Comparison for Temperature Controlled

Transport on Truck and DFC

Sl. No. Details Units Calculation Truck Conventional Rail DFC

Details from the Market Onward Return Onward Return Onward Return

From N/A N/A Delhi Mumbai Delhi Mumbai Delhi Mumbai

To N/A N/A Mumbai Delhi Mumbai Delhi Mumbai Delhi

A. Average Distance Km. N/A 1403 1420 1386 1386 1504 1504

B. Duration Days N/A 4 4 6 6 1 1

C. Tons Transported Ton N/A 13.5 13.5 13.5 13.5 13.5 13.5

D. Handling Charges* (Loading, Unloading,

Transferring at First /Last Mile) ₹ N/A N/A N/A 20,000.00 20,000.00 12,000.00 12,000.00

E. Cost to Shipper ₹ Market Rate 98,280.00 54,839.97 70,735.70 70,735.70 44,139.99 44,139.99

Cost Advantage 8% 46%

Costs to Shipper

F. Total Cost to Shipper ₹ L = Konward + Kreturn 153,119.97 141,471.40 88,279.98

G. Per Km. OR ₹/ Km. G = E / A 70.05 38.62 51.04 51.04 29.35 29.35

H. Per Ton ₹/ Ton H = E / C 7,280.00 4,062.22 5,239.68 5,239.68 3,269.63 3,269.63

I. Average Cost Per Trip(Direction) ₹/ Trip I = F /2 76,559.99 70,735.70 44,139.99

J. Cost per Km. ₹/ Km. J = F / (Aonward + Areturn) 54.33 51.04 29.35

K. Cost per Ton ₹/ Ton K = I / C 5,671.11 5,239.68 3,269.63

Costs to Operator

L. Average Cost per Trip ₹/ Trip L = I - Margins 67,755.59 56,588.56 35,311.99

M. Average Cost per Km. ₹/ Km. M = L / (Aonward + Areturn) 48.00 40.83 23.48

N. Average Cost per Ton ₹/ Ton N = L / C 5,018.93 4,191.75 2,615.70

Costs to Operator

O. Revenue for Operator per tkm ₹/ Tkm O = K 5,671.11 5,239.68 3,269.63

P. Cost for Operator per tkm ₹/ Tkm P = N 5,018.93 4,191.75 2,615.70

Q. Sales Revenue for Operator per tkm ₹/ Tkm O - P 652.18 1047.93 653.93

Comparative Costs For Temperature Controlled Transport on Truck, Conventional Rail and DFC, India, 2016

Source: Indian Railways, CONCOR, Primary Interviews, Frost & Sullivan Analysis (Prices as of 09-Mar-2018 on Vyom (Online Platform with Real-time Freight Rates))

Note: *Dedicated Freight Corridor will 40% cheaper than Indian Railways

61


6.3. Estimation of Revenue on Temperature Controlled Transport

On Western Corridor– All Scenarios

Estimated Cost Breakdowns For Temperature Controlled Transport on Truck, Rail and DFC,

India,2016


Year

Annual Temperature Controlled Transport

Revenues – No DFC

Conventional

Rail Road Total

2016 8.5 13.1 21.6

2021 29.8 76.6 106.4

2025 66.2 231.2 297.4

2030 112.1 510.2 622.3

2035 158.4 975.1 1,133.5

2040 233.4 1984.5 2,218.0

CAGR

(2016-2040) 14.2% 22.2% 20.3%

Year


Revenues with WDFC– 60% Shift to Rail

Rail - DFC Road Total

2016 6.5 5.2 11.8

2021 24.2 30.7 54.8

2025 64.0 91.6 155.6

2030 137.9 192.9 330.9

2035 254.1 351.5 605.6

2040 492.8 681.3 1,174.1

CAGR

(2016-2040) 18.9% 21.5% 20.2%

Year




2016 6.9 2.6 9.5

2021 26.0 15.3 41.3

2025 70.7 46.0 116.7

2030 157.6 99.2 256.8

2035 310.0 185.2 495.1

2040 656.3 367.8 1,024.1

CAGR

(2016-2040) 20.0% 21.9% 20.6%

Year




2016 7.3 0.0 7.3

2021 27.8 0.0 27.8

2025 77.8 0.0 77.8

2030 181.2 0.0 181.2

2035 374.5 0.0 374.5

2040 855.6 0.0 855.6

CAGR

(2016-2040) 21.0% N/A 21.0%

(Unit: Billion INR)

62


6.4. Cash Flow Analysis on Temperature Controlled Freight

Annual Total Freight Volume, India (2016-2040)

Assumption: 60% freight will shift to WDFC

Pan-

India

DMIC

area WDFC

Rail

Freight

Truck

Freight

Total

Freight

Rail Temp-

Controlled

Penetration

Rail Temp-

Controlled

Freight

Volume

Rail Temp-

Controlled

Freight

Volume

Rail Temp-

Controlled

Freight

Value

CY (billion

tkm)

(billion

tkm)

(billion

tkm) (%)

(billion

tkm)

(billion

tkm)

(billion

JPY)

2016 249 52 301 1.0% 3.0 1.8 192

2021 320 93 413 2.0% 8.7 5.2 558

2025 384 132 516 3.0% 17.8 10.7 1,137

2030 444 164 609 5.0% 32.3 19.4 2,063

2035 506 202 708 7.0% 50.3 30.2 3,209

2040 637 282 919 9.0% 79.5 47.7 5,073

Total Cost and Revenue of Rail Freight Operator (Estimation)

Total Revenue INR/tkm 5,671.11 5,239.68 3,269.63

Total Cost INR/tkm 5,018.93 4,191.75 2,615.70

Sales Revenue INR/tkm 652.18 1047.93 653.93

Estimation of Business Cash Flow for

Temperature Controlled Rail Freight Operator

Assumption：After starting WDFC operation, 60% of

total regional freight will shift from truck and conservative

rail freight to WDFC.

As shown in page 60, it is estimated as INR 653.93/ ktm of

WDFC freight operator by taking account all related

subjects (e.g. business revenue, container utilization fee,

handling cost, and workers payment etc.)

It is expected that pan-India total freight volume is

calculated as column (a) in the left table.

According to industry interviews, 60% of total investment

focusing on DMIC area. If we see WDFC region is almost

the same as DMIC area, total rail temperature controlled

freight might also concentrating along WDFC by 60% of

pan-India volume: (b) in the left table, the as a result, it is

estimated as JPY 192 billion (2016) and JPY 2,063

billion (2030) for the sales revenue of Temperature

Controlled Rail Freight Operator (INR1=JPY1.626).

Truck Conservative Rail DFC

(a) (b)

Source: DFCCIL, Industry interviews, Frost & Sullivan analysis

*The value of 2016 is just potential value

63


6.5. Major Government Funding Schemes Indian Government is focused on establishing robust cold chain infrastructure to enhance

farmers’ income

With a focus on

increasing farmers’

income, the

Government of

India has

introduced various

funding schemes

under the Ministry

of Agriculture,

Ministry of Food

Processing

Industries (MoFPI),

National

Horticultural Board

(NHB), National

Horticultural

Mission (NHM)

among others to

encourage

investment in Cold

Chain facilities.

Objective

To introduce modernization of farm

produce storage and transportation

methods, thereby increasing the shelf life

and market access of the produce

Approval Committees

Committees comprise of

high-ranking officials from

MoFPI, NABARD, MIDH and

other related agencies

Preference for Integrated

Solutions

Stand alone projects are not

sponsored under this

scheme

Stakeholders

Initiated by the Government of India,

Ministry of Agriculture, MoFPI, NHM,

NHB among others are the stakeholders

in Cold Chain related schemes

Sampada Schemes

Mega Food Parks:

Grants: 50% of Costs* | Min. Investment ₹2.5 billion

Mandates: Min. 25-30 Food Processing Units

Timeline: Project Completion within 30 months of

approval

Infrastructure for Agro-Processing Clusters:

Grants: 35% of Costs* | Min. Investment ₹250 million

Mandates: Min. 5 Food Processing Units

Timeline: Project Completion within 20 months of approval

Creation of Backward and Forward Linkages:

Grants: 35% of Costs* | Max. Grant of ₹50 million

Eligible Units: Fruits and Vegetables, Meat, Seafood and

Dairy processing among others


approval

Integrated Cold Chain and Value Addition

Infrastructure:

Grants: 35% of Storage Facility Costs* and 50% of

other Costs*| Max. Grant of ₹100 million

Mandates: At least 2 or more components (Farm-level;

Storage and Transportation)


approval Source: MoFPI, Frost & Sullivan Analysis

64


6.6. Other Schemes Related Schemes from Other Government Agencies include funding for Stand-Alone Cold

Chain Components

NHM Schemes

NHB Schemes

NHM

Cold Storage Assistance:

• Grants: 35% of Costs

• Storage Type: Large Cold Chambers with >

250 MT each

• Cost Norms:

• ₹7,600/MT for capacity 5001-6500 MT



• Storage Type: Multi-Temperature

Chambers with <250/MT each

• Cost Norms :




Cold Storage Assistance:

Grants: 35% of Costs | ₹8,000/MT and

₹10,000/MT for single and multiple temperature

chambers respectively

NHB

Reefer Vehicles Assistance:

Cost Norms : ₹6 million/9MT unit

Reefer Vehicles Assistance:

Cost Norms : ₹6 million/9MT unit

Schemes for Registered Exporters

Component Based Assistance:

In-Principal Approval (IPA) is mandatory for the following

grants.

The grants include only 40% of the project eligible costs.

• Reefer Vehicles: Max. ₹750,000/ vehicle

• Storage Areas: Max. ₹1 million

• Handling Systems; Pre-Cooling Facilities; Treatment

Facilities and Other Cold Chain Components: Max.

₹2.5 million each

• Integrated Post-Harvest Handling Systems

• Max. ₹7.5 million

Agricultural and

Processed Food

Products Export

Development

Authority (APEDA)

has an elaborate

scheme covering

every component of

the Cold Chain for

the benefit of

Exporters.

National

Horticultural Board

and Mission are

encouraging cold

chain investment

through subsidies

and grants for

integrated as well

as stand-alone

projects.

APEDA

MIDH Schemes

Cold Chain Assistance:

Grants: 35% of Costs

Cost Norms:

• Integrated Packhouse - ₹5 million per unit

• Pre-Cooling Unit - ₹2.5 million per unit of 6 MT

• Cold Room (Staging) -₹1.5 million per 30 MT

• Unit

• Mobile Pre-Cooling Unit - ₹2.5 million per unit

• Primary Processing Unit - ₹2.5 million per unit

• Ripening Chambers - ₹100,000/MT | Max. 300MT

MIDH

Source: MoFPI, Frost & Sullivan Analysis

65

7. Cost & Environmental (CO2) Effect Estimation

by DFC

66

§7. Cost & Environmental (CO2) Effect Estimation by DFC

7.1. Annual Freight Volumes and CO2 Emissions – No DFC Scenario Heavy Container and Truck traffic in the Western Corridor due to proximity, alignment to ports

and huge volumes of container traffic mostly moved by roads

Annual Freight Volumes and CO2 Emissions – No DFC Scenario, India, 2016-2040

• Without expansion in rail capacity, the growth in freight traffic gets saturated, creating circumstances for a

severe modal shift towards roads

• Increase in road traffic will directly increase the amount of congestion, causing a significant increase in

CO2 emissions


220 234 247 253 260 277

130

232

329 411

504

706

0

200

400

600

800

1,000

1,200

201

6

202

1

202

5

203

0

203

5

204

0

An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(

Bil

lio

n T

KM

)

Annual Freight Volume – No WDFC Scenario

Rail Road

983

350

1.9 2.0 2.0 2.1 2.1 2.2

4.6 8.1

11.5 14.4

17.6

24.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

201

6

202

1

202

5

203

0

203

5

204

0

An

nu

al

Em

issio

ns

(M

illi

on

To

n C

O2)

Annual CO2 Emissions – No WDFC Scenario

Rail Road

26.9

6.4

67


7.2. Annual Freight Movement Along WDFC with Scenarios of

Modal Shift

Annual Freight Volumes Under Various Scenarios, India, 2016-2040

• Even though the net weight of freight remains the same, as the share of rail traffic increases, the total

traffic volume in ton km transported comes down due to higher aggregation by rail - reducing the net

distance travelled.


249 320

384 444

506

637 52

93

132

164

202

282

0

100

200

300

400

500

600

700

800

900

1,000

2016

2021

2025

2030

2035

2040

An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illi

on

TK

M)

Annual Freight Volume with WDFC– 60% Shift to Rail

Rail Road

258

349 430

508 588

757

26

46

66

82

101

141

0

100

200

300

400

500

600

700

800

900

1,000

2016

2021

2025

2030

2035

2040

An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illi

on

TK

M)


Rail Road

268

378

476

572

670

877

0

100

200

300

400

500

600

700

800

900

1,000

2016

2021

2025

2030

2035

2040

An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illi

on

TK

M)


Rail Road

919

301

898

284

877

268

68


7.3. Annual CO2 Emissions Along WDFC with Scenarios of

Modal Shift

Annual CO2 Emissions Under Various WDFC, India, 2016-2040

• A 20 % modal shift on the DFC reduces CO2 emissions on road by almost 50%

• Indian railways is aiming to achieve 100% electrification on it’s broad gauge network, electrifying 38,000

route kilometers by2021

• The Diesel Locomotive Works in February 2018, successfully converted a 2,600HP diesel locomotive into

a 5,000 HP electric locomotive


1.4 1.7 1.9 2.1 2.3 2.8

1.8

3.2

4.6

5.7

7.0

9.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2016

2021

2025

2030

2035

2040

An

nu

al

Em

issio

ns

(M

illi

on

To

n C

O2)

Annual Emissions with WDFC– 60% Shift to Rail

Rail Road

1.4 1.8 2.2 2.4 2.7

3.3 0.9

1.6

2.3

2.9

3.5

4.9

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2016

2021

2025

2030

2035

2040

An

nu

al

Em

issio

ns

(M

illi

on

To

n C

O2)


Rail Road

1.5

2.0 2.4

2.7 3.1

3.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2016

2021

2025

2030

2035

2040

An

nu

al

Em

issio

ns

(M

illi

on

To

n C

O2)


Rail Road

12.7

3.2

8.2

2.3

3.8

1.5

69


7.4. Annual Freight Volumes and CO2 Emissions in 2040– All

Scenarios

Annual Freight Volumes and CO2 Emissions – All Scenarios, India, 2040

• The shift to rail will allow for more efficient aggregation and distribution of freight , As more shippers start moving to

rail, it will create new services such as “uberization” of reefer capacities

• A 60% shift to rail will reduce emissions by 52.9% and the complete shift of traffic to rail will reduce emissions by

85.7%


820

840

860

880

900

920

940

960

980

1,000

No WDFC WDFC(Rail): 60%Road: 40%

WDFC(Rail): 80%Road: 20%


An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illio

n

TK

M)

Annual Freight Volume – All Scenarios in 2040

983

0.0

5.0

10.0

15.0

20.0

25.0

30.0




An

nu

al

Em

issio

ns

(Millio

n T

on

CO

2)

Annual GHG Emissions – All Scenarios in 2040

919

898

877

6.5% 8.6%

10.8%

26.9

12.7

8.2

3.8

52.9%

69.3% 85.7

%

70


7.5. Cumulative Freight Volumes and CO2 Emissions In 2016 to

2040 – All Scenarios

Cumulative Freight Volumes and CO2 Emissions – All Scenarios, India, 2016-2040

12,500

13,000

13,500

14,000

14,500

15,000

15,500

16,000

16,500




An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illio

n

TK

M)

Cumulative Freight Volume – All Scenarios in 2040

16,294

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0




An

nu

al

Em

issio

ns (

Millio

n T

on

CO

2)

Cumulative GHG Emissions – All Scenarios in 2040

14,831

14,343

13,855

9.0%

15.0%

396

190

128

66

52.1% 67.7%

83.2%

12.0%


• The 100% shift to rail will transport cumulative 13,855 billion tkm over a period of 25 years

• A 60% shift to rail will reduce cumulative emissions by approximately 50% and the complete shift of traffic

to rail will reduce cumulative emissions to one-sixth over 25 years

71


0%

5%

10%

15%

20%

Pe

ne

tra

tio

n in

fre

igh

t o

pe

rati

on

s

in %

Estimated Penetration of Cold Chain – No WDFC Scenario

Road Rail

7.6. Estimated Penetration of Cold Chain Operations – All Scenarios With increasing shift to DFC rail services , the demand for new refrigerated trucks and containers

reduce as the higher frequencies of operation boost availability and utilization of units in

operation

Penetration of Temperature Controlled Freight Transport By Mode, India, 2016-2040

Sources: DFFCIL, Indian Railways, Primary research , Frost & Sullivan Analysis

0%

2%

4%

6%

8%

10%

12%

14%

16%

Pe

ne

trati

on

in

fre

igh

t o

pe

rati

on

s

in %

Estimated Penetration of Cold Chain – 60% Shift to Rail

Road Rail

0%

5%

10%

15%

20%

Pe

ne

trati

on

in

fre

igh

t o

pe

rati

on

s

in %


Road Rail

0%

5%

10%

15%

20%

Pe

ne

trati

on

in

fre

igh

t o

pe

rati

on

s

in %


Road Rail

72


7.7. Estimation of Specific CO2 Emissions – Road,

Conventional Rail and DFC

Specific CO2 Emissions – Road, Conventional Rail and DFC, India, 2016-2040 35.1

35.0

34.9

35.0

35.0

35.0

41.1

41.0

40.9

41.0

41.0

41.0

8.5

8.3

8.2

8.1

8.0

7.9

10.0

9.9

9.7

9.6

9.5

9.3

5.4

5.2

5.0

4.8

4.6

4.4

6.4

6.2

5.9

5.6

5.4

5.2

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

2016 2021 2025 2030 2035 2040 2016 2021 2025 2030 2035 2040

(CO

2 g

m/t

on

km

)

Road Conventional Rail DFC Rail

Regular Operations Refrigerated Operations

Specific Emissions

in gm CO2/tkm Regular Trucks Refrigerated Trucks Rail Freight

Refrigerated

Containers

Total WTW 130.96 153.53 41.68 49.29

• Refrigerated trucks have 17.2% higher specific emission of CO2 than regular trucking

• Refrigerated containers on rail have 18.3% higher specific emission of CO2 than regular

containers

From UK DEFRA Guidelines for Company Reporting on Greenhouse Gas Emissions 2017 Conversion


Applying these to

DFCCIL specific

WTW emissions

73


7.8. Annual Temperature Controlled Freight Volumes and CO2

Emissions – No DFC Scenario In the “No DFC” scenario, refrigerated rail volumes continue to be weak and any growth is

expected to come from flows for export

Annual Temperature Controlled Freight Volumes and CO2 Emissions – No DFC Scenario, India, 2016-2040


• Indian Railways– “I will tell you railways by large have been geared for movement of bulk quantities which are of similar nature,

and moving in bulk like coal, iron ore, cement, food grains, fertilizers and such. When it comes to a niche market and you are

catering to a particular segment you need to build capacities, and you need to build handling capabilities for handling that

specific market, and what are the returns.“

• Warehouse Company – “Today the reefer truck is primarily run by CONCOR, private level operators also do it, now reefer truck

also becomes sustainable if you have volumes, and the only volume you have is on the export cycle, that is for meat. Dadri or

Kanpur or wherever reefer trains are being run from these locations to JNPT and it will be carrying meat, nothing coming in the

return trip, you don’t have volumes. “

Industry Speak

1.6 4.6 8.2 11.1 12.6 14.8 2.3

10.9 26.3

46.6

71.4

116.5

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

20

16

20

21

20

25

20

30

20

35

20

40

An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illio

n T

KM

)

Annual Freight Volume – No WDFC Scenario

Rail Road

131.3

3.9

0.02 0.04 0.08 0.11 0.12 0.14 0.09 0.45

1.08

1.91

2.93

4.77

0.00

1.00

2.00

3.00

4.00

5.00

6.00

20

16

20

21

20

25

20

30

20

35

20

40

An

nu

al

Em

issio

ns

(Millio

n T

on

CO

2)

Annual GHG Emissions – No WDFC Scenario

Rail Road

4.91

0.11

74


7.9. Annual Temperature Controlled Freight Movement Along

WDFC with Scenarios of Modal Shift

Annual Temperature Controlled Freight Volumes Under Various Scenarios, India,2016-2040


• DFCCIL– “Railways today do not carry fruits and vegetables primarily, it is fish and other meat products. Once Freight Corridor comes into the picture,

the delivery time drops down substantially. DFC will be running 24 days in total, so that will be reduced. Till date on this 3,300 km corridor we have

already finalized 21 connectivities which include 4 ports and 6 freight terminals. We have fixed schedules, there are trains every ten minutes, average

speed is 30 km we will be covering around 670 km.“

• Dairy, Milk and Meat expected to be largest contributors to temperature controlled domestic movements on the DFC

Industry Speak

2.0 5.9 12.6

21.8

32.3

50.2

0.9

4.3 10.4

17.6

25.7

40.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2016

2021

2025

2030

2035

2040

An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illi

on

TK

M)


Rail Road

2.1 6.4

14.0

25.0

39.4

66.8

0.5 2.2

5.2

9.1

13.6

21.6

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2016

2021

2025

2030

2035

2040

An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illi

on

TK

M)


Rail Road

2.2 6.8 15.3

28.7

47.6

87.1

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2016

2021

2025

2030

2035

2040

An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illi

on

TK

M)


Rail Road

90.2

2.9

88.4

2.6

87.1

2.2

75


7.10. Annual Temperature Controlled CO2 Emissions Along

WDFC with Scenarios of Modal Shift

Annual Temperature Controlled CO2 Emissions Under Various Scenarios, India, 2016-2040

• Indian 3PL Company – “I don’t know the different figures of eastern and western, but western side is more traffic for containers. India

is a country which uses largely ammonia, when compared to the western countries we use very less Freon. We are still playing very

safe as far as the refrigerants are concerned. For cold storage I can say easily 80% is ammonia, hardly 20% Freon. I think it will be too

early for our country to get into regulations. We hardly have 9,000 trucks in the country. It is expected to improve, but the trend in any

industry if you look at the trend has been to enforce anything people become very reluctant to invest into that. “

Industry Speak

• The move to 100% electrification and sustainable energy sources by the Indian railways offers additional offsets for

temperature controlled transportation

Sources: DFFCIL, Indian Railways, Primary research, Frost & Sullivan Analysis

0.01 0.04 0.07 0.12 0.17 0.26 0.04 0.18

0.43

0.72

1.05

1.64

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2016

2021

2025

2030

2035

2040

An

nu

al

Em

issio

ns

(M

illi

on

To

n C

O2)


Rail Road

0.01 0.04 0.08 0.14

0.21 0.35

0.02

0.09 0.21

0.37

0.56

0.88

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

2016

2021

2025

2030

2035

2040

An

nu

al

Em

issio

ns

(M

illi

on

To

n C

O2)


Rail Road

0.01 0.04

0.09

0.16

0.26

0.45

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

2016

2021

2025

2030

2035

2040

An

nu

al

Em

issio

ns

(M

illi

on

To

n C

O2)


Rail Road

1.9

0.05

1.23

0.03

0.45

0.01

76


7.11. Annual Temperature Controlled Freight Volumes and CO2

Emissions in 2040– All Scenarios

Annual Temperature Controlled Freight Volumes and CO2 Emissions – All Scenarios, India, 2040

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0



WDFC(Rail):100% Road: 0%

An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illio

n

TK

M)

Annual Temperature Controlled Freight Volume – All Scenarios in 2040

131.3

0.00

1.00

2.00

3.00

4.00

5.00

6.00




An

nu

al

Em

issio

ns

(Millio

n T

on

CO

2)


90.2 88.4 87.1

33.7% 4.91

1.9

1.23

0.45

61.4% 75.0

% 90.8%

• A 60% shift to rail will reduce emissions by 61.4% and the complete shift of traffic to rail will reduce

emissions by 90.8%

32.7% 31.3%

• Indian 3PL Company– “How this one can be linked with your DFC project is ensuring the DFCCIL is allowing for private

entities to setup private terminals, private siding terminals, so that private operators can optimize the DFC and ensure that

utilization is as high as it can be. The very fact of moving containers onto rail and then having that integration is definitely

going to have an impact in our environment here“

Industry Speak


77


7.12. Cumulative Temperature Controlled Freight Volumes and

CO2 Emissions in 2016 to 2040 – All Scenarios

Cumulative Temperature Controlled Freight Volumes and CO2 Emissions

– All Scenarios, India, 2016-2040

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0




An

nu

al

Fre

igh

t T

ran

sp

ort

ed

(B

illio

n

TK

M)

Annual Temperature Controlled Freight Volume – All Scenarios in 2040

1,344.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0




An

nu

al

Em

issio

ns

(Millio

n T

on

CO

2)


919.3 832.7

707.5

31.6% 47.4%

47.0

19.2

11.9

4.0

59.2% 74.6%

91.4%

38.1%

• The 100% shift to rail of temperature controlled freight will transport cumulative 707.5 billion

tkm over a period of 25 years

• A 60% shift to rail will reduce cumulative emissions by approximately 2.5 times and the

complete shift of traffic to rail will reduce cumulative emissions by almost 12 times over 25

years

Sources: Indian Railways, DFCCIL, Frost & Sullivan Analysis

78


7.13. Current Air Quality Index and Projections – No-DFC Scenario Burning of crop stubble by farmers in areas around New Delhi such as Punjab, Haryana,

Western Uttar Pradesh is one of the major contributing factors towards Air Pollution in New Delhi.

Delhi Mumbai

Air Quality in New Delhi as on 12th March, 2018 Air Quality in Mumbai as on 12th March, 2018

• Air in New Delhi has an annual average of about 122

µg/m3 of PM, which is 12.2 times the WHO safe levels

• Air in Mumbai has an annual average of about 63 µg/m3

of PM. It is 6.3 times the WHO safe level of PM2.5.

Sources: AQICN, IIT-K Study, Frost & Sullivan Analysis

45%

17%

14%

9%

8%

7%

Average percent contributions of major sources to PM pollution,

New Delhi, 2016

Dust and Construction

Waste Burning

Transport

Diesel Generator Sets

Industries

Domestic

35%

17% 16%

15%

13%

4%

Average percent contributions of major sources to PM pollution,

Mumbai, 2016

Dust

Transport

Waste Burning

Secondary Inorganic Aerosols

Industries

Marine

79


7.14. Government Initiatives and Plans to Reduce Air Pollution Through Paris Climate Agreement, BS-VI standards, Indian Government is focused on reducing

emissions and thereby controlling the air pollution in major cities such as Delhi and Mumbai

Sources: UN, cpcb.gov.in, Frost & Sullivan Analysis

M&HCV Trucks, Tractor,

Trailers 47.9%

LMV (Goods) 18.3%

Bus 11.8%

Cars and jeeps 9.8%

Two wheelers 3.6%

Omni buses 3.5%

Others 5.1%

Major Sources of Air Pollution, India, 2015

• The national average of M&HCV Trucks , Lorries and

trailers contribution to GHG emissions is around 47.9%

• Applying this to Mumbai Delhi transport volumes

Paris Climate Agreement

• Paris Climate Agreement – The Agreement within the United

Nations Framework Convention on Climate Change (UNFCCC) that

targets greenhouse gas emissions mitigation, adaptation and

finance starting in the year 2020.

• India is a party nation for Paris Climate Agreement – The

Government has agreed to target 2030 and reduce carbon

emissions to ensure that global temperatures don't rise more than

2°C

• Controlling air pollution is one of the key focus areas under this

agreement.

Bharat Stage IV (BS-IV) norms

• Implementation of Bharat Stage IV (BS-IV) norms in 63 selected

cities and universalization of BS-IV by 2017

• Adherence to better vehicle emission standards through phased

elimination of old vehicles

• The Government is also targeting 2020 to establish BS-VI emission

norms (On the lines of Euro-6 emissions standards – enhanced

standards with lower emissions)

Fuel Regulations

• Efforts to increase cleaner fuel usage – by enforcing Compressed

Natural Gas (CNG) as fuel in cities such as Delhi

• Emission standards established for other sources of emissions –

diesel generators.

• ISO 8178 D2 standards are established as the norm for non-road

engines. Regulations were established in 2002 and further

strengthened in 2013.

• Restricted and approved fuel for use in the Union Territory – Delhi.

• Diesel and motor gasoline, with lower sulphur content and

other pollutants thereby reducing the emissions.

80


7.15. National Level Strategy to Address Air Pollution Concerns National Clean Air Programme (NCAP) formulated to devise medium term strategy to tackle

increasing air pollution across the country

Measures to Address Air Pollution

• Announced in December, 2017 by the Ministry of State for Environment, Forest and Climate Change (MOEF&CC)

• Technology Assessment Cell has been set-up under NCAP to evaluate the technologies for prevention, control and abatement of air pollution

National Clean Air Programme

(NCAP)

Action Plan

Expand Air Quality Monitoring

Network across India

Reduce Pollution by 50% in 100 Non-

Attainment Cities* by 2020

Sources: Press Information Bureau, Govt. of India;, Frost & Sullivan Analysis

*Non-attainment city is an area considered to have air quality worse than the National Ambient Air Quality Standards (NAAQS)

Comprehensive Management Plan for tackling air pollution

• Aims at a collaborative approach to address all sources of pollution

• Coordination between Central Ministries, State Governments, Local Bodies and all the other

stakeholders involved.

81


7.16. Secondary Impact of Air Pollution India stands to lose about 10.2% of its GDP due the secondary impacts of Air Pollution.

About 228

cities

in India

are highly

polluted

• The Particulate Matter (PM) in these cities are more than permissible levels prescribed by Central

Pollution Control Board (CPCB) under the National Ambient Air Quality Standards (NAAQS)

• By 2030, there will be 6-10% decrease in yields of crops such as rice and wheat. This constitutes the

staple diet of most of Indians.

Impact of Air Pollution in India

Health

Hazards

• Premature Deaths

• Respiratory Disorders

• Ischemic Heart Disorders

Labour

Productivity

• Illness causing loss of

workdays

• Restricted activity days

Agricultural

Impact

• Crop yield loss

• Pest and disease build-up

3%

Cost of

Healthcare

Costs

5.7%

Cost of

Environmental

Degradation

GDP Loss

1.5%

Cost of

Agricultural

Loss

Secondary Impacts

Sources: OECD, Frost & Sullivan Analysis

82


7.17. Analysis of Effect of Improvement In Environment

Sl. No. Details Units Calculation Surat Vadodara Jaipur Mumbai New

Delhi

Annual CO2 Emissions in Cities Along the WDFC

A Total Annual CO2 emissions Mg km2 10,967.7 2,481.4 6,571.5 8,562.0 20,843.8

B National Average of CO2 contribution from M&HCVs,

Lorries, Trucks % 47.9%

C CO2 Emissions from M&HCVs, Lorries, Trucks Mg km2 C = A * B 5,253.5 1,188.6 3,147.8 4,101.2 9,984.2

D Penetration of Cold Chain Operations in Total Road

freight movement % 2.4%

E CO2 Emissions from Temperature Controlled

M&HCVs, Lorries, Trucks Mg km2 E = C * D 126.1 28.5 75.5 98.4 239.6

Annual CO2 Emissions - No DFC Scenario

F CO2 Emissions from Temperature Controlled

M&HCVs, Lorries, Trucks Mg km2 F = E 126.1 28.5 75.5 98.4 239.6

Annual CO2 Emissions - 60% Shift to DFC

G Reduction in GHG Emissions from shift to rail in

2016 % 54.3%

H CO2 Emissions from Temperature Controlled

M&HCVs, Lorries, Trucks Mg km2 H = F * G 57.6 13.0 34.5 45.0 109.5


I Reduction in GHG Emissions from shift to rail in

2016 % 70.7%

J CO2 Emissions from Temperature Controlled

M&HCVs, Lorries, Trucks Mg km2 J = F * I 36.9 8.4 22.1 28.8 70.2


K Reduction in GHG Emissions from shift to rail in

2016 % 87.0%

L CO2 Emissions from Temperature Controlled

M&HCVs, Lorries, Trucks Mg km2 L = F * K 16.4 3.7 9.8 12.8 31.2

Source: Central Pollution Control Board (CPCB), Frost & Sullivan analysis

83


7.18. Current Air Quality Scenario and Projections – Delhi Out of the 1,600 cities surveyed by WHO, the air quality in New Delhi was declared as the worst

among the major cities due to high PM content – as high as 12.2 times the WHO safe level.

Air Pollutants due to Vehicular Emissions In Delhi , India, 2016-2030

HC 76

NOx 210

PM 12

CO 401

CAGR 6.0%

CO 902

NOx 425

HC 130

PM 18

Air Pollutants

due to Vehicular Emissions

(In Thousand

Tons/ year)

• Particulate matter is the leading cause of cardiac conditions such as Ischemic heart and respiratory

disorders such as bronchitis. Reduction in PM, will reduce the number of cardiac and respiratory

disorders

Sources: OECD, IISC, Frost & Sullivan Analysis

CAGR 5.2%

CAGR 3.9%

CAGR 2.9%

CO 651

NOx

307

HC 94

PM 13

CO 580

NOx

273

HC 84

PM 11.6

CO 505

NOx

238

HC 73

PM 10.1

2030 - 60% Shift to DFC



2030 – No DFC 2016 – No DFC

84


7.19. Modal Shift to Rail and Environmental Improvement Targets Commercial vehicles consumer about 28.2% of the country’s diesel. Therefore a freight transport

shift from road to rail will substantially decrease the consumption of diesel.

• India spends approximately 2.8% of its GDP on crude oil

purchase

• WDFC being an electrified dedicated rail network, a shift of

freight transport from road to this rail network will reduce

India’s dependency on fossil fuels

• Freight transport via rail running on

electric power supply will directly reduce

emissions, which are due to combustion

of fossil fuels

• Modal shift of freight transport from road to rail will

reduce the following:

o Time Spent in Traffic Congestion

o Maintenance of road infrastructure and

transportation equipment due to Heavy Vehicle

Movement – freeing the highway infrastructure

for passenger transport

Reduced Dependency

on Fossil Fuels

Reduced

Emission

s

Reduced

Time Spent

on Traffic

Congestion

Sources: data.gov.in, Frost & Sullivan Analysis

• DFCCIL – “We conducted a study about the environmental impact of the entire radar, for the two corridors eastern and

western, for 30 days of operation 467 million tons of carbon dioxide was emitted. This is an impressive figure, it gives the

green effect of DFC, I don’t know the different figures of eastern and western, but western side is more traffic for

containers.“

Industry Speak

85

8. Potential, Advantage, Benefit Analysis for

Japanese Companies

86

§8. Potential, Advantage, Benefit Analysis for Japanese Companies

8.1. Growth of Indian Retail Market Food and Grocery retail is expected to dominate the market with more than 50% share of overall

retail market

Organized Retail, 45

Unorganized Retail, 500

Online Retail, 5 Organized Retail, 320

Unorganized Retail, 1650

Online Retail, 130

Growth of Indian Retail Market by Categories, 2015 - 2025

2015 2025

Indian Retail

Market Size

(billion USD)

550 2,100

Organized

Retail Share 8% 15%

Share of Product Categories by Market Size, 2015

• Food and Grocery forms the backbone of the

Indian retail sector. There are an estimated 8

to 9 million food and grocery stores in India.

• The Food and Grocery category is expected

to grow at a rate of 13% - 14% per annum

reaching a total market size of US$1,150

billion by 2025.

Market Share of Industry Categories, 2015 Market Share of Industry Categories, 2025

Sources: India Food Report, Frost & Sullivan Analysis

(billion USD) (billion USD)

87


8.2. Growth of Grocery and Retail Market Fruits and vegetables and Dairy products are expected to have the maximum growth mainly due

to the drift away from cereals, grains and pulses

Cereals, Pulses and Staples

37%

Fruits and Vegetables

25%

Dairy Products 22%

Non vegetarian 9%

Snacks and Confectionaries

3%

Beverages 3%

Health Foods 1%

Market Share of Food and Grocery Retail

Market, India, 2016

Cereals, Pulses and Staples

31%

Fruits and Vegetables

28%

Dairy Products 24%

Non vegetarian 9%

Snacks and Confectionaries

4%

Beverages 3%

Health Foods 1%

Market Share of Food and Grocery Retail

Market, India, 2021

• Food and Grocery which is the biggest category of consumer spend can be retailed best by a convenience based format.

Two thirds of Indians shop for food and grocery and daily need products within a one kilometer radius of where they live.

• Indians consumers are also highly price sensitive. Thus the format offering cost advantage will be preferred by consumers.


88


8.3.1 Market Size Breakdown: Cereals and Pulses Indian consumers prefer a wide variety of edible oil and spices opening up opportunities for new

entrants in the market

Cereals,

Pulses and

Staples

Market Size in

2016 (in INR

Billion)

CAGR (2016-

2021)

Market Size in

2021 (in INR

Billion)

Branded

Share

Potential for

Japanese Market

Penetration

Explanation

Rice 2,247 7% 3,152 6%

Rice is a staple of the Indian diet.

Japanese rice can be sold at

supermarkets targeted at urban

customers . Niche target base

Wheat 1,296 8% 1,904 5% India is the second largest producer of

wheat, following China.

Edible Oil 1,299 12% 2,290 30% As indian cuisine uses a lot of oil,

potential market for traditional sauces

Sugar 1,323 15% 2,660 1% Very few companies: Mawana Sugars,

Simbhaoli Sugars

Pulses 724 8% 1,063 2% India is also one of the leading producers

of pulses

Spices 649 10% 1,045 15%

Indian cuisine has absorbed spices

from across the world and Japanese

spices would be attractive. Once

Indians acclimatize with Japanese

flavors, it offers export opportunities

for more types of food

Other

Cereals 662 5% 844 7% -

Total 8,250 10% 13,287 10%


５４３２１ Rating

(“5” shows the highest opportunity):

１

１

３

１

３

４

３

89


8.3.2. Market Size Breakdown: Dairy Products India has the fastest growing ice cream market in the world. Annual growth rate has been over

13% since 2012

Dairy Products

Market Size

in 2016 (in

INR Billion)

CAGR

(2016-2021)

Market Size in

2021 (in INR

Billion)

Branded

Share

Potential for

Japanese Market

Penetration

Description

Milk 2,760 15% 5,551 35% High potential for

flavored milk

Ghee 605 10% 974 12% Amul, Parag and Nestle

dominate the market

Yoghurt and

Buttermilk 540 20% 1,344 10%

Dominated by Amul and

Nestle

Butter 322 15% 648 15% Dominated by Amul and

Nestle

Dairy Whitener

& Milk Creamer 300 20% 746 30%

Dominated by Amul and

Nestle

Ice Cream 84 20% 209 60% High potential due to

high consumption

Cheese 36 20% 90 60% Exotic cheese like

sakura cheese

Other (Paneer,

Khoya) 324 20% 806 20% -

Total 4,988 16% 10,477 25%




４

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１

１

３

３

１

90


8.3.3. Market Size Breakdown: Snacks & Confectionary Over 49% of Indian consumers associate sweet or sugary snacks with convenience. As many as

19% of consumers would like to see a wider variety of natural snacks that have no additives.

Snacks &

Confectionary

Market Size

in 2016 (in

INR Billion)

CAGR

(2016-2021)

Market Size in

2021 (in INR

Billion)

Branded

Share

Potential for

Japanese Market

Penetration

Description

Biscuits 253 15% 440 509

Occupies ~60% of

entire bakery

production

Salty Snacks 212 18% 410 486

Dominated by

Haldirams, Pepsico and

ITC

Chocolate &

Confectionary 204 20% 420 508

Fastest growing

market with high

potential

Convenience

Foods 84 20% 170 209

Growing need for

convenience among

time-pressed

consumers is a major

driver

Ketchup, Jams

and Pickles 42 20% 90 105

Dominated by Nestle

and HUL

Frozen Foods &

Snacks 31 25% 80 95

Not a lot of players.

High potential

Total 826 18% 1,610 1,890




４

３

３

５

５

３

91


8.3.4 Market Size Breakdown: Beverages The beverages industry is expected to become more segmented and niche in the future. This will

be fueled by the growth of food processing sector

Beverages

Market Size

in 2016 (in

INR Billion)

CAGR

(2016-2021)

Market Size in

2021 (in INR

Billion)

Branded

Share

Potential for

Japanese Market

Penetration

Description

Tea 202 12% 355 55%

Large tea drinking

population allows for

growth of Japanese

matcha, green tea

Carbonated

Drinks 168 12% 296 80%

Dominated by Coca

Cola and Pepsi

Packaged

Drinking Water 150 20% 373 50%

Dominated by Coca

Cola and Pepsi

Coffee 81 15% 162 60%

High domestic

production rate leading

to low potential

Fruit Based

Drinks 66 20% 164 80%

Fruit based drinks very

popular in India , used

to “cool” down in hot

Health &

Energy Drink 19 25% 57 100%

One of the fastest

growing industries

Powdered Drink 6 20% 15 100%

Indian market is

extremely familiar with

powdered health drinks

Total 690 15% 1,388




２

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２

１

３

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92


8.3.5. Market Size Breakdown: Health Foods Rapidly growing markets in food services sector, increase in standard of living, changing lifestyle

and growing inclination of consumers towards healthier lifestyle is expected to drive health foods

industry.

Health Foods

Market Size in

2016 (in INR

Billion)

CAGR (2016-

2021)

Market Size in

2021 (in INR

Billion)

Potential for

Japanese Market

Penetration

Description

Malted Food

Drinks 72 20% 179

Fermented or yogurt

based japanese drinks

might be highly palatable

to the Indian population

Baby Food 24 20% 60

Currently dominated by

Nestle. New entrants with

high quality products will

have a chance to sustain

in the market.

Breakfast Cereals 13 25% 38 Expected to grow three

folds in the next 3 years

Total 109 21% 282




５

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２

93


8.4. Challenges in the Indian Food and Grocery Industry Food preferences in India are extremely localized and differ by socio economic strata, ethnicity

and age profile of residents

Due to low density of retail outlets,

consumers have to trade convenience with

price, range and ambience.

Even the premium consumers are

increasingly becoming value driven as

they expect discounts in most products.

Dietary patterns, poor electricity supply,

low penetration of refrigerators forces

consumers to become extremely value

conscious and prepare home made food.

Diversity of tastes and preferences due to

multiple cultures poses a challenge for

participants aspiring a pan India presence.

Storage facilities are critically low when

compared to the requirement. An

estimated one fifth of perishable produce

rots in transit

Corruption in rail cargo transportation industry has led to theft of refrigerated goods. In order to transport refrigerated goods

on time, the supplier has to pay considerable amounts of bribe depending on the amount of cargo transported.

Less than 2% of road infrastructure in India

is covered by national highway which form

the backbone of cargo transportation. This

2% highway manages 40% of the cargo,

making it difficult for smooth operation.

Challenges in the Indian Food and Grocery Industry, 2017

Food and

Grocery

Industry

Challenges


94


Perspectives of Indian Market Participants on

Entry of Japanese Companies, India, 2017

8.5. Indian Perspectives on Foreign Partnerships Indian companies are mainly looking to partner with Japanese companies to benefit from their

technology in reefer trucks and solutions to integrate truck to rail systems

0

1

2

3

4

5

Technology and Driver

Training

Food Products

Logistics Solutions for last mile

/ handling

Secondary cold chain

investments

Storage Facilities

Capital Investment

Technology and Driver Training

• Indian companies are currently open to partner with Japanese

companies to gain access to technologies in various segment of

cold chain transportation. These include technology solutions for

reefer trucks, trucks that can integrate with rail wagons, to improve

life and usability of reefer trucks, natural refrigeration (using Co2)

and a solution that can help CNG transport cold chain.

• Additionally, driver training centers to handle reefer trucks are also

in high demand. Food Products • Majority of the Indian service providers feel that the Japanese

companies have a huge scope for food and processed food

products in the following industries: Dairy products, Ice cream,

meat / poultry, fruits and vegetables

Logistics Solutions for Last Mile / Handling

• Due to high cost of operation and failure to partner with domestic

service providers, logistics companies are open to partner with

foreign companies that offer logistics solutions on last mile

connectivity and intermediary handling of goods.

Secondary Cold Chain Investments

• The Indian agencies feel that Japanese participants have an

opportunity to invest / collaborate with companies that are already

popular that offer products such as FMCG / ice cream, and later

acquire them to continue organized operations. .

Storage Facilities

• Indian suppliers are expected to partner with other companies or

outsource storage operations to achieve quality and also enable

them with increasing their inventory to cater to a larger product

category.

Capital Investments • There are very few players expecting capital investments

from Japanese companies to improve their operations.

These investments include purchase of new vehicle fleet

(double decker trucks) and storage facilities.

Source: Primary Interviews, Frost & Sullivan Analysis

*Weighted score of interest levels

95


8.6. Indian Perspectives on Japanese Companies

Entering the Market

“There are no multi-temperature enabled vehicles for dairy products. Some major QSRs use these vehicles for

their retail supply. Apart from them none of the other companies use them. There is no structure for multi-

temperature enabled vehicles and the rates are also exorbitant“

- Company A, Cold Chain, Indian Dairy Foods Maker

“We would be broadly interested in partnering with Japanese companies for technological benefit. Maybe with

controlling of features, it would be possible to control your reefer trucks from your location, user dependency on

your drivers. Some of the OEMs are also providing those kinds of technology. So anything that helps us

increase the life of the asset, and usability of it as normally 5-6 years is the maximum life of the asset.“

- Company B, Cold Chain, Indian 3PL Company

“Japan has phenomenal experience in connecting farms from hilly areas to mainland. And they have already

been debating investments in India in logistics for a while. A major Japanese logistics company came in tied up

with an Indian logistics company, A trading company in Japan has been around as a trader for a very long time.

Another one has been here as a trader for very long, but not really invested in anything. They tied up with

another container maker to put out these containers. So I would say that there are opportunities.“

- Association C

“In Delhi and Mumbai if you look at the restaurants, organized restaurant chains like Japanese restaurants the

availability of fresh stock is not a problem, but the only thing is whether they will get all the ingredients together

or not is a problem. They might need some ingredients that you need to get down south or from Mumbai, or

from Maharashtra, but if you look at our country, we are producing maximum amount of the products

everywhere. That is not a constraint barring just a few commodities, and what I understand is the fresh produce

that is being used in hotels and restaurants comes from north eastern part of our country which is sold at a

higher premium price because the quality is very good. But that is an area which is right now is very restricted,

like you said that is through air cargo, even through very few players were intervened into that area. So there is

again a huge scope of putting a logistic solution in place.“

- Association D


96


Perspectives of Japanese Market

Participants on Indian Market, India, 2017

8.7. Japanese Perspectives on Indian Market Growth of food, QSR and grocery industries are key drivers for foreign investments in India

0

1

2

3

4

5Food Products

Temperature controlledTransportation

Cold chain fordifferentiation

Restaurants

Technology

Food Products

• Japanese company believe that the food industry is expected to

have an exponential growth in the future. These products include

imported foods for deli, quick service restaurants and fresh foods.

However, they believe that the opportunity for frozen food and

meat will be low due to vegetarianism and preference towards

fresh food in the country.

Temperature Controlled Transportation

• The Japanese companies expect a rise in demand for temperature

controlled transportation (containers, trucks etc.,) for the movement

of cargo in the pharmaceutical industry and other products that

required a self contained environment.

Cold Chain for Differentiation

• In addition, Concor occupying 75% of freight car operation, the

other ten companies competing for the remaining share. 2nd and

3rd largest companies are expected to focus on building a cold

chain for differentiation..

Restaurants

• The Japanese suppliers think that Japanese food is not popular in

India, but feel that the preference of food is changing in the

younger generation and there is room to accept 2% to 3% of

Japanese products such as green tea, tofu, soba and so on.

Technology • As long as it is not limited to constant temperature transport, the

Japanese feel that there are opportunities in automobile production

related industries.

*Weighted score of interest levels


97


8.8. Japanese Perspectives on Indian Cold Chain Market

“I think the imported foods for deli, fresh foods and the food service industry will be a great market opportunity.

The spread of Japanese food will be limited in the short term but is expected to pick up. Also, I think the

popularity of frozen food in India is generally low.“

- Company A, Japanese Trading Company

“There is opportunity for Japanese container makers since they have developed - 12 feet, considering domestic

road conditions. and there is a possibility that a self-contained container may be necessary in India in the future

and Japanese container companies can develop this business locally.“

- Company B, Japanese Railway Freight Company

“There are opportunities for entry, as Japanese-style family restaurants can also develop menus mixed with

Indian and Japanese cuisines, with familiar Western foods mainly in pasta and other delicacies.“

- Company C, Cold Technology Company

“Penetration rate of refrigerators in general households is low and the cold chain market is immature, but we

have seen fresh fruits and vegetables packed in supermarkets for foreigners and wealthy people since last year.

Considering its volume in terms of consumption, it seems that they are currently transporting them by truck

rather than rail. In addition, buffalo meat which is largely exported is transported by refrigerated railway.

- Company D, Japanese 3PL Company


98


8.9. Barrier to Entry Lack of technological advancement container and vehicle fleet, and absence of multimodal

solutions to enhance convenience in cold chain transportation is expected to attract foreign

investments in India

Industry Target Products /

Markets

Key Market

Participants Barrier to Entry Impact on Competing

Food Products

Dairy, Ice cream, meat,

poultry, fresh foods,

imported deli food, fruits

and vegetables

Amul, Paras, Nestle,

Mother Dairy,

Kwality Walls, Siam

Canadian

Low - Mid

• Market with highest predicted growth

rate.

• Even though there are a lot of

participants, there are ample

opportunities for new entrants

Technology

Reefer truck

technologies, integration

of truck and rail,

refrigeration, storage

facilities

Carrier, Thermo

King Mid

• Currently dominated by Carrier and

Thermo King.

• Strong aftermarket and service

network is necessary to compete

with existing participants

Restaurants

and

Secondary

Businesses

Quick Service

Restaurants, FMCG,

Dairy companies

Starbucks, KFC,

McDonalds, Subway Low - Mid

• Popularity of QSR is growing in India.

• These services are altered to provide

vegetarian products to cater to the

Indian market.

• There will be short term barriers to

enter the market, however, Japanese

companies can initially target

restaurants and later establish their

brand in this segment.

Container and

Storage

Temperature controlled

containers and storage

facility

NA Mid - High

• India has a large number of

temperature controlled storage

facilities.

• Competing in this market will be

difficult due to political barriers.


99


8.10.1 Expanding Export Opportunity by Cold Chain Growth (1/2) Low Per Capita Consumption of Meat Products in India allows for Large Export Capacities of Fish,

Seafood and Meat Products

Categories Products A B C D Details

Meat and Meat

Products

Bovine Meat

While majority of exports are towards Middle East,

some of the products are exported to countries

such as USA. Japan can import Bovine Meat and

Edible Offal from India.

Edible Offal of Bovine

Animals, Sheep, Swine and

Goat

Sheep/Goat Meat

Fish and Seafood

Products

Crustaceans Low per capita consumption of meat products in

India allows for large export capacities given the

long coastline. Investment in infrastructure can

further develop the Pisciculture market for reliable

export quality products.

Govt. schemes and technical assistance

programmes are increasing awareness and skills,

thereby increasing the production capacities.

Frozen Fish Fillets and

Other Fish Meat

Live Fish

Molluscs

Dairy Product

Cheese and Curd India is one of the leading producers of Milk and

Dairy Products. Reliable quality of milk and dairy

products can be leveraged due to the robust dairy

supply chain established in India through the Milk

production development programme – “Operation

Flood”.

Japan currently imports – cheese, curd, milk,

cream and bird’s eggs that can be sourced from

India

Milk and Cream

Bird’s Eggs

High Medium Business Potential

Low Sources: UN Trade Data, Frost & Sullivan Analysis

Note：A – Import to Japan for Consumption, B – Import to Japan for Manufacturing, C – Export to India from Japan, D – Export from India to Other Markets

Please see the note in the bottom for definition

100


8.10.2. Expanding Export Opportunity by Cold Chain Growth

(2/2) India is one of the Largest Outsourcer of Pharmaceutical Products to the US. India can be a

Potential Partner to Japan too

Categories Products A B C D Details

Processed Meat

Products

Processed Crustaceans,

mollusks and other seafood

products

Exports to USA from Japan can be sourced from

India. Additionally, India is currently exporting to

European countries such as Belgium, France.

Japan can potentially capture these European

markets by sourcing from India. India exports

Caviar and Caviar substitutes to countries such as

USA, Spain etc. Japan can source these products

for export and/or Japanese Consumption.

However, in the recent past Japan has not

imported large quantities of Caviar products.

Processed Fish

Caviar and Caviar

Substitutes

Processed Food

Items and Baked

Foods

Pasta, noodles, ready to eat India exports Pasta to USA, UK which can be

routed through Japanese. Additionally, Japan can

import Pasta for Japanese Consumption. Malt Extracts, Cereal

Products

Processed Fruits

and Vegetables

Food Products

Frozen and/or Processed

Food Products such as

Frozen Vegetables

India majorly exports processed fruits and

vegetables products to the Western Markets such

as USA, UAE, Canada and others.

Pharmaceutical

products

Medicaments –

Pharmaceutical

Intermediaries

India is one of the largest contract manufacturing

locations for USA. It has the largest number of

FDA-approved contract manufacturing units

outside US. International Standards in terms of

infrastructure, processes, protocols and

procedures are set-up among manufacturers that

can be leveraged by the Japanese

pharmaceutical market for pharmaceutical

manufacturing outsourcing.

Medicaments – Finished

Goods

Animal Blood – For

Therapeutic, Prophylactic

and Diagnostic Uses

Sources: UN Trade Data, Frost & Sullivan Analysis High Medium Business Potential Low

Please see the note in the bottom for definition

Note：A – Import to Japan for Consumption, B – Import to Japan for Manufacturing, C – Export to India from Japan, D – Export from India to Other Markets

101


8.11. FDI Regulations – Railways Infrastructure Indian Railways (IR) has enabled 100% Foreign Direct Investment in below given sectors.

Therefore, given the lack of integrated infrastructure involving the Rail, there is huge business

opportunity

Dedicated

Freight

Lines

Suburban

Corridor

Projects

through

PPP

Passenger

Terminals

Mass Rapid

Transport

Systems

Rolling

Stock

Freight

Terminals

Railway

Line/Siding

s

High Speed

Train

Projects

Signaling

Systems

Railway

Electrificatio

n

€

¥

£

FDI in Railways

$ Industry Speak

• Indian Railways– “I will tell you railways by large have

been geared for movement of bulk quantities which are of

similar nature, and moving in bulk like coal, iron ore,

cement, food grains, fertilizers and such. When it comes to

a niche market and you are catering to a particular

segment you need to build capacities, and you need to build handling

capabilities for handling that specific market, and what are the returns. I

mean considering the railway tariff structure if the output is more than

what we received that is the effort which is to be made by the railways

is large and disproportionate in terms of the returns we can get, then

railways is not really interested. But not withstanding that we do support

the initiative of the private sector or through our policies, some other

ways and means, we can promote all kinds of traffic, it’s not that we

don’t want to promote this sort of traffic, but the fact remains that cold

chain is very critical, even at one point if the cold chain is broken.“

As per the Foreign Direct Investment (FDI) Policy

that was drafted in August, 2017 by the Department

of Industrial Policy and Promotion (DIPP), under the

Ministry of Commerce and Industry, Railways

Infrastructure, barring proposals for sensitive areas,

is open for 100% FDI.

Sources: Department of Industrial Policy & Promotion, Frost & Sullivan Analysis

102


8.12. Government of India’s Initiative to Facilitate and

Expedite Japanese Investments in India


Introduction

• Management Team set up by the Department of Industrial Policy & Promotion (DIPP), Ministry of

Commerce & Industry, GoI. Includes representatives from both, the Government of Japan (From

METI, Aichi Prefecture and JETRO) and Government of India.

• Under the partnership with India, Japan plans to invest JPY 3.5 trillion. A Core-Group has been

set-up with the Cabinet Secretaries of 17 involved ministries to realize this investment effectively.

Japan Plus

Role of Japan

Plus

• Initiation, facilitating and guiding Japanese Investment

• Investment Opportunities information across sectors, in specific projects and Japan Industrial

Townships

• Assistance to Core-Group

• Resolution of issues faced by Japanese companies in India

In Action Agenda signed by both the Governments, Minister of State for Ministry of Commerce & Industry, India and

Minister for Ministry of Economy, Trade and Industry, Japan agreed to develop 12 potential sites as Japan Industrial

Townships. Among the 12 cities selected, following 7 cities are located around the WDFC

City State

Jhajjar Haryana

Greater Noida Uttar Pradesh

Neemrana Rajasthan

City State

Mandal Gujarat

Supa Parner Maharashtra

Ghilot Rajasthan

103


8.13. Preferential Incentives towards Japanese Industrial

Townships

Indicator Rajasthan Maharashtra Gujarat Madhya

Pradesh Haryana Uttar Pradesh

Power Yes Yes Yes Yes Yes Yes

Roads Yes Yes Yes Yes Yes Yes

Water Yes Yes Yes Yes Yes Yes

Exemption of CST Yes (0.25%

instead of 2%)

Yes (100% of

CST Abatement) No

Yes (100%

reimbursement of

VAT and CST for

10 years)

No No

Exemption of

Electricity Duty

Yes (50 % for 7

years) Yes (100%) Yes (For 5 years)

Yes (For 10

years)

Yes (Special

Package of

Incentives is

available for

mega projects)

Yes (For 10

years)

Exemption of Stamp

Duty Yes (50 %)

Yes (100% within

investment

period for

acquiring land)

N.A. Yes Yes Yes

Exemption of Entry

Tax

Yes (Investment

more than 750

crores)

N.A. Yes Yes (For 7 years) Yes

Yes (Only on

Iron and Steel to

be used as raw

material)

Exemption of Land

Acquisition Tax

Yes (50% for

seven years) N.A. N.A. Yes (upto 50%) Yes Yes

Single Window

Clearance Yes Yes N.A. Yes Yes Yes

Special Preferential Incentives to Japanese Industrial Townships Proposed by State Governments


104

9. Summary

105

§9. Summary

9.1. Dairy, Fruits, Meat and Fish Key Products that Can

Benefit from the WDFC

Sources: APEDA, Frost & Sullivan

Fruits Meat • Fruit production grew at a CAGR

of 3.7% between 2011-2015

• Bananas, Mangos and Papaya

are the three largest produced

fruits

• Strawberries & Pomegranates

are the fastest growing fruits

• Vegetables are mostly locally

consumed and may not

• Meat production grew at a CAGR

of 7.1% between 2011-2015

• Uttar Pradesh is the largest

buffalo meat processing center

and accounts for 60% of exported

buffalo meat

• JNPT exported of 559,394 MT of

buffalo meat in 2016 (half the

volume estimated to originate at

Dadri)

Fish Dairy

• Total Fish production grew at a

CAGR of 5.6% between 2011-2015

• Inland Fish production grew at a

CAGR of 8% between 2011-2015.

• Demand for high-value fishes

developing in northern India, West

and East coasts being primary

production centers

• Milk production grew at a CAGR

of 5% between 2011-2015

• WDFC is ideally placed as the

Northwest is both a high

production and demand zone(4

out of top 5 states in zone).

• The total NCR liquid milk market

size is estimated at 7.6 million

liters per day

Rank 1-5

Rank 6-10

Rank 11-15

WDFC

Legend

Pro

du

cti

on

106

§9. Summary

Indian Railways

Digitized

Procurement

SLA

Adherence

Mobility

Services

Digitized platforms to sell products and services that are

API and Cloud ready

Switching to “as a service”-oriented business models

from only basic transport-oriented ones

Increased network capacity, enhanced traffic

management, and reduced costs considered when

designing a connected rail system

Infrastructure for storage at required temperatures, safe

and fast handling of consignments along the rail network

Adherence to schedules and increased speed of delivery

Tracking and tracing of consignments

Offering Ro-Ro solutions for trucks and buses

Launching B2B platforms that integrate multiple mobility

services to enable seamless intermodal transport

Offering infrastructure support for containers and trucks

9.2. What Customers Would Like From The Railways Technology advancements, and changing customer demands are key factors that will influence

the growth of rail freight volumes


107

§9. Summary

9.3. Summary


Logistics efficiency will be much improved by implementation of WDFC with freight volume capability: 260%, average operation speed : 300% to conventional rail. Price table of WDFC that is expected to not be much different from current IR price range. Due to reefer trucks shortage, not a small number of consignees might shift to WDFC even for the short range intercity logistics. However, it will be required to prepare qualified reefer trucks that undertake first/ last one-mile logistics connecting between factory and logistics hubs at the same time.

It is mandatory of consumers mind demanding cold chain products, however even in the large cities, majority of citizens still follow ‘Local production for local consumption’ style. Only with rich consumers, we can see aggressive mind for purchasing add-value cold chain products (with about YoY+20%), it will expand to below income layers in near future. For igniting cold chain market growth, it is needed to develop popular products focusing on dairy and processed fruits products.

According to the comments from industry players, it is definitely lacking of packing facilities within Indian cold chain eco-system. In this area, there are not so many local vendors with sophisticated technologies, then this is one of the most attractive area for Japanese logistics solution companies. In fact, DFCCIL and state governments are considering to include these facilities within multi-modal logistics hub along WDFC.

Almost pharmacy industry is the only segment that can achieve temperature and shock monitoring and managing process during transportation. However, like ice cream makers, they demand these type of back-end services, and there are no excellent local independent vendors. This area is also expected to become important segment for overseas companies. But all companies have to be in mind about price sensitivity of Indian consignees. Add-value services can be applies only with add-value products.