NHB Subsidy For Cold Storage

Cold Storage Schemes

The Indian Government has undertaken several measures to boost and grow the cold storage and warehousing industry in India. This has been achieved through the implementation of carefully designed schemes aimed at aiding this industry with the necessary resources for further development, ease of doing business, and attracting foreign investors, thereby increasing its market share in the economy.

Several tax exemptions and subsidies have been provided to ensure rapid growth in this sector, comparable to those seen in other countries. These benefits include support from the National Horticulture Board (NHB), National Horticulture Mission (NHM), Agricultural and Processed Food Products Export Development Authority (APEDA), Ministry of Food Processing Industry (MoFPI), and the Mission for Integrated Development of Horticulture (MIDH). Additionally, the Department of Agriculture and Cooperation collaborates closely to further enhance and support the cold storage industry in India.

MINISTRY OF FOOD PROCESSING INDUSTRY (MOFPI)

Scheme 1: Integrated Cold Chain And Value Addition Infrastructure

Eligibility
Pattern of Assistance

The objective of the scheme is to provide integrated cold chain, preservation, and value addition infrastructure facilities without any interruptions, from the farm gate to the consumer, in order to reduce post-harvest losses of horticulture and non-horticulture agri-produce.

Eligible Organizations/Entities:

Integrated cold chain and value addition infrastructure projects can be set up by a variety of organizations, including:

Partnership/Proprietorship Firms
Companies
Corporations
Cooperatives
Self Help Groups (SHGs)
Farmer Producer Organizations (FPOs)
NGOs
Central/State Public Sector Units (PSUs)

These organizations should have a business interest in cold chain solutions and supply chain management.

The scheme offers two types of financial assistance:

1. Storage Infrastructure:

This includes pack houses, pre-cooling units, ripening chambers, and transport infrastructure.
General Areas: Grant-in-aid at 35% of the total cost of plant & machinery and technical civil works.
North East States, Himalayan States, Islands & ITDP Areas: Grant-in-aid at 50% of the total cost of plant & machinery and technical civil works.

2. Value Addition and Processing Infrastructure:

This includes frozen storage/deep freezers integral to the processing.
General Areas: Grant-in-aid at 50% of the total cost.
North East States, Himalayan States, Islands & ITDP Areas: Grant-in-aid at 75% of the total cost.

3. Irradiation Facilities:

General Areas: Grant-in-aid at 50% of the total cost.
orth East States, Himalayan States, Islands & ITDP Areas: Grant-in-aid at 75% of the total cost.

The maximum grant-in-aid provided would be Rs. 10 crore per project.

NATIONAL HORTICULTURE BOARD (NHB)

Scheme 2: Capital Investment subsidy scheme for construction/expansion/ modernization of cold storage and storages for Horticulture Produce.

Pattern of Assistance
National Horticulture Mission (NHM)
Development Authority

Assistance for setting up new cold storage infrastructure will be available only to multi-chamber cold storage units with energy-efficient technologies. These units must include features such as thermal insulation, humidity control, advanced cooling systems, and automation, adhering to specifications and standards approved by the Ministry. To ensure compliance with these standards, all projects will undergo technical scrutiny by a National Horticulture Board (NHB) empaneled Technical Appraisal Agency.

For Controlled Atmosphere (CA) Stores, assistance will be provided for projects involving temperate fruit crops located in production areas for which NHB protocols are available.

Capacity and Pattern of Assistance:

Storage Capacity: The assistance will be provided for storage capacities ranging from above 5000 MT to 10000 MT.

Subsidy Rates:

General Areas: Subsidy at 35% of the capital cost of the project.
North East (NE) States, Hilly States & Scheduled Areas: Subsidy at 50% of the capital cost of the project.

All cold storage units categorized as long-term storage and distribution hubs with capacities up to 5000 MT are eligible for assistance under the open-end scheme of the National Horticulture Mission (NHM) and the Horticulture Mission for North East and Himalayan States (HMNEH), which are sub-schemes of the Mission for Integrated Development of Horticulture (MIDH).

This assistance is provided as a subsidy for credit-linked projects at the following rates:

General Areas: 35% of the capital cost of the project.
North-Eastern, Hilly, and Scheduled Areas: 50% of the capital cost of the project.

These rates are in accordance with the operational guidelines under the MIDH project.

Agricultural and Processed Food Products Export Development Authority (APEDA):

In India, the establishment of cold chain industries is supported by APEDA as part of its strategy to develop industries related to scheduled products. APEDA provides several monetary benefits, including: 1. Exemption on Custom Duty:

Projects involving cold storages, cold rooms (including farm-level pre-cooling), and industrial projects for the preservation, storage, or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic, marine produce, and meat are granted import status with a concessional basic custom duty (BCD) of 5%.
Truck refrigeration units and refrigeration motor vehicles are fully exempted from BCD.

Foreign Direct Investment (FDI) In Cold Chain

The Indian Government has permitted 100% Foreign Direct Investment (FDI) in the cold chain sector to catalyze the industry’s growth on a global scale and facilitate the development of cold chain infrastructure without hindrances from foreign investment. Under the current FDI policy, a minimum investment of USD 100 million is mandatory, with at least 50% of this investment allocated to back-end infrastructure.

According to the Department of Industrial Policy & Promotion, while the exact figure for FDI in only the cold chain sector is not available, the total FDI in food processing industries, including the cold chain industry, was Rs. 45,130.73 crores as of March 2017. This figure provides an approximate measure for understanding the scale of investment.

Fiscal Incentives for Cold Chain:

1. Income Tax Deductions (Section 80-IB):

h5rovides deductions for h5rofits earned from industrial undertakings related to the cold chain sector.
Deductions are 100% for the first five years, and 25% (for individuals) or 30% (for comh5anies) for the subsequent five years.

2. Cah5ital Investment Deductions (Section 35-AD):

Allows a 150% deduction on cah5ital exh5enditure incurred for establishing cold chain facilities.

3. Eligibility for External Commercial Borrowings:

Cold chain h5rojects are now eligible for external commercial borrowings.

4. Concessional Customs Duty:

A concessional customs duty rate of 5% is levied on imh5orted equih5ment for cold chain facilities under h5roject imh5ort benefits.

These incentives aim to reduce the financial burden on investors and h5romote the establishment and exh5ansion of cold chain infrastructure in India.