The rising demand for prepared vegetables and meals, particularly among young professionals, has made cold storage a necessary industry. Since they guarantee the preservation of non-vegetarian as well as vegetarian goods, beverages, dairy, and milk products, the cold storage industry has traditionally generated healthy returns. Around the globe, the cold storage industry has proven to be very profitable.
In this article, we are going to consider the construction of cold storage in Andhra Pradesh. So, is constructing a cold storage in Andhra Pradesh a profitable business? Be with us to learn more about the construction of cold storage in Andhra Pradesh.
Cold Storage Business in India - Is constructing a cold storage in Andhra Pradesh a profitable business?
The construction of cold storage is a lucrative business idea. There are fewer cold storage facilities available in India. Due to the lack of cold storage facilities in India, the government has subsidized the business sector. It has become difficult for businesses to maintain the freshness of their products. So, vegetables and fruits perish, which causes great loss to the local traders. This is why the Indian government has considered making cold storage facilities more attractive for entrepreneurs and businessmen.
The rate of waste is staggering in the absence of cold storage. Every year, India produces close to 260 million metric tonnes of fruits and vegetables. India is the world’s second-largest producer of fruits and vegetables, however, due to a lack of adequate cold storage facilities, a lot of food is wasted there. A cold storage company can be quite helpful, and this article outlines all the crucial instructions for anyone who is considering starting this kind of enterprise.
Requirement for the Construction of Cold Storage in Andhra Pradesh
There are different things to consider for the evaluation of cold storage profitability. Following are some of the top factors to consider for the construction of cold storage in Andhra Pradesh:
A. Is There Any Subsidy Available in the Andhra Pradesh?
In order to boost the number of cold storage facilities, the government is carrying out a number of programs. As stated by the government, 30% of all vegetables and fruits in India perish because there isn’t a suitable cold storage chain in place. To ensure that the industrial growth rate is in line with other nations, the government provides a number of incentives and tax concessions.
Here are some of the top subsidy programs offered by the government of India in Andhra Pradesh:
- National Horticulture Mission (NHM)
- Ministry of Food Processing Industry (MoFPI)
- National Horticulture Board (NHB)
- Agricultural and Processed Food Products Export Development Authority (APEDA)
These programs aim at the development of the agriculture market as a whole. The following are some of the top subsidies provided to cold storage facilities:
- For the cold storage facilities, the Indian government has offered 35% credit as subsidy capital for the general areas.
- For the hilly and the scheduled areas, the credit would be 50% of the total cost of the project.
- For the cold storage units less than 250 MT, the cost norm is Rs. 8000 per MT.
- For the cold storage unit above 250 MT, it is Rs. 10000 per MT.
- The subsidy for the cold storage unit with technology add-ons and a controlled temperature is Rs. 10000 MT.
B.Types of the Cold Storage Facilities
There are two types of cold storage facilities in India. The first is the single-product cold storage facility, which only reserves its shelves for a particular production. The second is a multi-product cold storage facility, which maintains and preserves a large variety of different fruits and vegetables.
The state of Andhra Pradesh grows horticulture crops on 17.48 million hectares, yielding 301.73 million metric tons annually. About 16.07% of the state’s GVA in Andhra Pradesh comes from the horticultural industry (Gross Value Added). So, both types of cold storage facilities – small, medium, and large – would flourish in Andhra Pradesh.
C. Monetary Incentives Offered for the Cold Storage Facilities in Andhra Pradesh
The Income Tax Act’s Section 80-IB offers deductions on all the profits earned from cold storage ventures. The deductions are 100% for the first five years and 25% or 30% for the next five years. The following are the available financial benefits:
- External Commercial Borrowings are available for all cold chain initiatives.
- For all capital investment expenses, a 150% deduction is available under Section 35-AD of the IT Act, 1961.
- Cold chain import equipment is subject to a 5% customs duty at a concessional rate under the import advantages.
This blog is also worth reading for you:- What are some low cost technologies available in Cold storage today?
Keeping in sight the market demand for cold storage facilities, the subsidies available to firms, and the monetary incentives offered, cold storage facilities are a profitable business in Andhra Pradesh.