A Step-by-Step Guide to Start a Cold Storage Business

In today's world, fresh produce, meat, dairy, and fruit are available to everyone, no matter where they live. However, delivering these perishable products fresh in every corner of the country is challenging.
Businesses must safely store and transport these goods to meet the increased demand for fresh produce. Cold storage plants create a suitable environment to keep perishable goods fresh for a longer period.

• Cold storage units store fruits, vegetables, dairy products, and pharmaceutical products in an artificially cooled environment to extend their shelf life.
• To set up cold storage in India , invest in storage space, cooling equipment, furniture, working capital, etc.
• The steps to start your cold storage business include creating a cold storage business plan, raising an initial investment, and getting the required licences and registrations.
• The government has launched several schemes to provide financial assistance to cold storage units in India.

The food and beverage sector, pharmaceutical industry, biotechnology, and several medical fields have a high demand for cold storage units. As India is a leading producer of agricultural produce and pharmaceutical products, the Indian cold chain industry is growing. The market for cold storage in India is expected to grow from USD 16 million in 2022 to USD 36 million in 2027 as per a recent market report.In 2015, a study conducted by NABARD Consultancy Services even revealed that we need more cold storage units in India than are currently available. The government offers financial assistance to newly constructed cold storage facilities tobridge this gap.

The size, temperature, and technical specifications of your cold storage unit depend on the stored product and its quantity. These factors also influence your cold storage project cost. Here's a sample list of requirements for setting up a storage unit for fruits and vegetables. This list is valid for a unit with a capacity of 10MT.

Also Read: List of Monthly Expenses For Small Business

You can start your cold storage plant in India by following these steps.

1. Choose a Suitable Type of Cold Storage Plant

There are various types of cold storage units based on the products stored, storage capacity, and cooling technology used.The cold storage construction cost and business model depend on which type you choose. Here are some examples of cold storage types.

2. Calculate an Estimated Cold Storage Investment

After determining the kind of cold storage you want to set up, estimate the cold storage investment that you will need. Consider the initial setup costs and ongoing operational expenses for the unit.Here's an example of the cold storage setup cost for a storage unit with a capacity of 5000 MT.

Get quotations from suppliers, real estate brokers, and manufacturers of machinery to estimate your total cold storage cost . This will help you determine how to arrangethe fundsneeded for your initial investment.

3. Draft a Comprehensive Cold Storage Business Plan

Before you start a new business, you must have a concrete business plan. A cold storage business plan consists of your business goals and detailed plans to achieve them. Generally, a business plan includes sections like:

• Business concept
• Branding strategy
• Details of the business, like the proposed location, type of storage unit, equipment to be used, etc.
• Target customers. For example, your target consumers could be MSMEs (micro, small and medium enterprises) in the food and beverage industry.
• Marketing plans
• Finance plans
• Projected financial statements with details of your expected revenue, costs, cold storage business profit, etc.

You may need to submit your cold storage business plan to prospective investors and financiers.

4. Arrange Funds for Your Cold Storage Project Cost

Now that your detailed business plan is ready, you must think of ways to arrange the required funds. The cold storage business needs a heavy initial investment because the cost of buying equipment and storage space is quite high. You can arrange funds through various sources, such as:

5. Register Your Cold Storage Business and Get the Required Licences.

Once the initial planning is finalised, you must register your cold storage business legally. This step involves completing several legal registrations, like:

• Business incorporation
• Obtaining a PAN (Permanent Account Number) for income tax purposes.
• Income tax registration
• GST registration
• Registration for various government schemes
• FSSAI licence

Consider getting business insurance to protect your business from fire hazards, employee injuries, and other risks.

The Government of India has launched several schemes that will help you kickstart your cold storage business. However, you need to incorporate a cooperative society to benefit from these schemes.

Also Read: 5 Ways to Raise Startup Capital for Business

Setting up a cold storage business from scratch requires heavy investment, patience, and technical knowledge. However, this business can be extremely rewarding in the long run due to the growing demand for cold storage units. Government subsidies, angel investors, and SME finance loans can help you raise the initial capital. You can also use Invoice discounting to help with operating expenses. To grow your business exponentially, try to come up with innovative solutions for businesses that require cold storage units to store their products.