Cold chains to bask in infra status

No mention of FDI in retail, excise on branded garments disappoints industry

The Budget has recognised post-harvest storage, including cold chains, as an infrastructure sub-sector. Further, capital investment in creation of modern storage capacity will be eligible for viability gap funding from the finance ministry. This was aimed at attracting investments into the sector, said Pranab Mukherjee. Investments in cold storage projects are gaining momentum. This year, 24 projects with a total capacity of 1.4 lakh metric tonnes have been sanctioned under the National Horticultural Mission. In addition, 107 cold storage projects with a capacity of 5 lakh metric tonnes had been approved, he said.

The Budget also exempted air-conditioning equipment and refrigeration panels used in cold chain infrastructure, including conveyor belts, from excise duty. He also extended excise duty exemption to conveyor belts and equipment used in cold storages, mandis and warehouses.

“Despite the growing production of vegetables and fruit, availability is inadequate due to bottlenecks in retailing capacity. An estimated 40 per cent of India’s fruit and vegetable production goes waste due to lack of storage, cold chain and transport infrastructure”, said the finance minister.

He said the 11th Plan aimed at building 30 mega food parks. So far, 15 had been sanctioned and another 15 would be approved in 2011-12. Similarly, the process of creating new capacity of 150 lakh metric tonnes with the help of private entrepreneurs and warehousing corporations had been fast-tracked, he said.

The minister also provided Rs 300 crore each for promoting cultivation of pulses through 60,000 villages, for bringing 60,000 hectares under oil palm plantations, vegetable clusters and nutri-cereals and for the National Mission for Protein Supplements.

The Budget also imposed a 10 per cent excise duty on branded made-ups and gaments.

The retail industry said though the measures for storage would benefit food retailing, steps such as imposing an excise duty on branded garments would have a negative impact on the industry.

“The Budget is a major disappointment for the industry as it failed to consider foreign direct investment in India's retail sector. If that had happened, the industry could have gained growth momentum”, said Pinakiranjan Mishra, retail expert with Ernest & Young. The grant of infrastructure status along with the viability gap funding proposal are expected to make a significant dent”, said Anil Choudhary, managing director and chief executive of National Bulk Handling Corporation Ltd.