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Cold-storage incentives to attract fresh funds

Cold-storage incentives to attract fresh funds
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First Published: Fri, Feb 26 2010. 05 19 PM IST
Updated: Fri, Feb 26 2010. 05 19 PM IST
Mumbai: India’s incentives to build cold-storage facilities will bring investment, cut food wastage and smoothen the supply chain in the world’s second biggest producer of fruits and vegetables, industry officials said.
Wastage of fruits and vegetables due to poor post-harvest management and lack of cold chain facilities have been estimated to cost up to Rs50,000 crore annually, as reported in the fifth and final report of the National Commission of Farmers.
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Finance minister Pranab Mukherjee on Friday announced number of schemes to attract investment in the sector as he wants to bring down “difference between the farm gate prices, wholesale prices and retail prices.”
“External Commercial Borrowings will henceforth be available for cold storage or cold room facility, including for farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat,” Mukherjee said.
“Once money starts coming through ECB route the investment size would be larger, which will expand the sector significantly,” said Anjani Sinha, managing director and chief executive of National Spot Exchange Ltd (NSEL).
The government also announced concessional import duty and exemption of service taxes for installation and commissioning equipment to promote mechanised handling in spot market.
It also exempted customs duty on crucial refrigeration units needed to produce refrigerated vehicles.
“Naturally these moves will attract new investment in the sector. It is a good decision for agriculture sector which is struggling with food wastage problem,” said Harish Galipelli, head of research with Kochi-based JRG Wealth Management.
Cold storage facilities are limited and the focus of the budget on bringing in more investment will boost warehousing and cold storage sector, R Ramaseshan, managing director of National Commodity and Derivatives Exchange Ltd.
“Recognising the high level of wastage in the farm sector, the Budget focuses quite strongly on creating an environment for higher investment in the warehousing space.”
The cold storages will help boost exports of fruits and vegetables, industry officials said.
In India, less than 2% of the fruits and vegetables produced are processed as against 65% in the US and 70% in Brazil, farm ministry estimates.
The government decided to extend hiring of private warehouses by state-run Food Corp. India for seven years from existing five years to meet the storage deficit, Mukherjee said.
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First Published: Fri, Feb 26 2010. 05 19 PM IST