India’s cold chain hits US$24.85 billion as the central subsidy scheme runs out
25 May 20265 min read
Summary
- India's cold chain logistics market reached an estimated US$24.85 billion in 2026 according to Mordor Intelligence, a commercial market-intelligence firm, with cold chain transportation the fastest-growing segment at around 11% CAGR.
- The Integrated Cold Chain and Value Addition Infrastructure scheme, funded at INR 4,600 crore (approximately US$555 million) by the Ministry of Food Processing Industries, ran through March 2026, with 376 projects approved and 268 operationalised.
- Quick-commerce expansion at Flipkart, Amazon and Tata's BigBasket is now pulling demand on cold chain infrastructure faster than the operator network is sized for, regardless of the policy decision on a successor scheme.
India’s cold chain logistics market reached an estimated US$24.85 billion in 2026, up from US$23.28 billion in 2025, according to Mordor Intelligence, a commercial market-intelligence firm. Mordor’s analysis projects market growth to US$33.12 billion by 2031 on a compound annual growth rate of about 5.91%. Cold chain transportation, the segment that handles temperature-controlled movement between farm, processing, warehouse and last-mile delivery, is the fastest-growing component at roughly 11% CAGR. The Ministry of Food Processing Industries’ Integrated Cold Chain and Value Addition Infrastructure scheme, the central-government subsidy that has underwritten much of the past decade’s build-out, ran through March 2026.
The combination of a growing market and a closing funding cycle is what makes 2026 a useful inflection point to read. Invest India confirms that 376 cold chain projects have been approved under the scheme, with 268 operationalised. The remaining 108 projects are at various stages of completion, and their finishing depends on whether the funding tail continues, the scheme is renewed in a successor form, or the private market picks up the residual capex.
What the scheme actually paid for
The Integrated Cold Chain and Value Addition Infrastructure scheme was capitalised at INR 4,600 crore (approximately US$555 million) and ran under the Pradhan Mantri Kisan SAMPADA Yojana umbrella. It paid for integrated cold chain projects covering pre-cooling, primary processing, cold storage, refrigerated transport and retail-end infrastructure. The subsidy structure typically covered 35% to 50% of project cost depending on the location, with grants paid as projects achieved operational milestones. That structure favoured large integrated operators with the balance-sheet capacity to fund the initial 50% to 65% themselves and recoup the grant on completion.
Smaller operators and farmer producer organisations relied on the scheme to make projects viable at all. Without the central subsidy, cold storage projects at sub-5,000 metric tonne capacity often fail the internal rate of return test that private financing requires. Invest India’s analysis flags that the operationalised projects under the scheme have collectively added 8,815 cold storage units to India’s infrastructure stock, with capacity skewed toward Maharashtra, Gujarat, Uttar Pradesh and Punjab.
The demand-side pull that does not pause
The reason the funding-cycle question matters is that demand is not waiting for the policy decision. Mordor’s analysis points to quick-commerce and e-commerce grocery expansion as the primary demand pull through 2026. The numbers are documented in primary disclosures and trade reporting. Reliance Retail crossed 1,000 Smart Bazaar stores in FY26 and reported FY26 gross revenue of INR 3.70 trillion (approximately US$39.29 billion), with growth across staples and processed food. JioMart now operates across more than 1,200 cities through a network of over 3,100 stores. Flipkart Minutes has crossed more than 800 dark stores and indicated an intent to double that count by end-2026. Amazon has reorganised its India fresh and grocery business around Amazon Now, with 330 to 370 dark stores live and roughly two new facilities added per day. Tata’s BigBasket has pivoted from scheduled to quick-first grocery delivery under its BB Now product. Each rollout translates into pressure on temperature-controlled warehousing within delivery range and on refrigerated last-mile fleets capable of holding two-temperature loads.
Cold chain transportation’s 11% CAGR is the symptom of that pressure. The headline market growth of 5.91% smooths across the slower-growing storage segment and the faster-growing transport segment. For sourcing directors planning 2026 capacity, the transport-cost line is where the squeeze shows up first because new reefer fleet capacity takes 18 to 24 months to build out, and the e-commerce platforms are expanding now.
Where the capex goes if the central subsidy does not return
The Ministry of Food Processing Industries has indicated interest in a successor scheme but has not published terms or a timeline. If the scheme is renewed in current form, the project pipeline that the existing 376 approvals represent can complete on schedule and the additional capacity comes online through 2027. If the scheme is not renewed, the residual projects face a financing gap that the private market will price aggressively. Mordor’s analysis notes that private equity activity in Indian cold chain accelerated through 2025, with several specialist funds raising India-focused vehicles in the US$200 million to US$500 million range.
Private capital changes the operator mix. Specialist funds tend to consolidate around integrated platform plays, which favours large operators with national footprints and squeezes out the sub-scale regional players that the central scheme deliberately included. For e-commerce groceries, that consolidation might lower per-unit costs but raises concentration risk: if national operators set service terms, smaller retailers and producer organisations face take-it-or-leave-it contracting.
What sourcing directors should plan around
Sourcing directors with India exposure should plan 2026 cold chain capacity on two working assumptions. First, the published market size figure of US$24.85 billion is more useful read as a floor than a ceiling, because quick-commerce grocery expansion is accelerating the demand curve faster than the operator pipeline can deliver. Second, the operator mix is likely to consolidate as central subsidy retreats and private capital takes its place. Both assumptions argue for testing service terms with national operators on multi-year contracts while the market is still fragmented enough to negotiate, rather than after consolidation has set rates.
The Ministry of Food Processing Industries’ decision on a successor scheme will be the single most important policy development for the sector in 2026. Operators may want to plan for both outcomes while that decision is pending.
The combination of a growing market and a closing funding cycle is what makes 2026 a useful inflection point to read. Invest India confirms that 376 cold chain projects have been approved under the scheme, with 268 operationalised. The remaining 108 projects are at various stages of completion, and their finishing depends on whether the funding tail continues, the scheme is renewed in a successor form, or the private market picks up the residual capex.
What the scheme actually paid for
The Integrated Cold Chain and Value Addition Infrastructure scheme was capitalised at INR 4,600 crore (approximately US$555 million) and ran under the Pradhan Mantri Kisan SAMPADA Yojana umbrella. It paid for integrated cold chain projects covering pre-cooling, primary processing, cold storage, refrigerated transport and retail-end infrastructure. The subsidy structure typically covered 35% to 50% of project cost depending on the location, with grants paid as projects achieved operational milestones. That structure favoured large integrated operators with the balance-sheet capacity to fund the initial 50% to 65% themselves and recoup the grant on completion.
Smaller operators and farmer producer organisations relied on the scheme to make projects viable at all. Without the central subsidy, cold storage projects at sub-5,000 metric tonne capacity often fail the internal rate of return test that private financing requires. Invest India’s analysis flags that the operationalised projects under the scheme have collectively added 8,815 cold storage units to India’s infrastructure stock, with capacity skewed toward Maharashtra, Gujarat, Uttar Pradesh and Punjab.
The demand-side pull that does not pause
The reason the funding-cycle question matters is that demand is not waiting for the policy decision. Mordor’s analysis points to quick-commerce and e-commerce grocery expansion as the primary demand pull through 2026. The numbers are documented in primary disclosures and trade reporting. Reliance Retail crossed 1,000 Smart Bazaar stores in FY26 and reported FY26 gross revenue of INR 3.70 trillion (approximately US$39.29 billion), with growth across staples and processed food. JioMart now operates across more than 1,200 cities through a network of over 3,100 stores. Flipkart Minutes has crossed more than 800 dark stores and indicated an intent to double that count by end-2026. Amazon has reorganised its India fresh and grocery business around Amazon Now, with 330 to 370 dark stores live and roughly two new facilities added per day. Tata’s BigBasket has pivoted from scheduled to quick-first grocery delivery under its BB Now product. Each rollout translates into pressure on temperature-controlled warehousing within delivery range and on refrigerated last-mile fleets capable of holding two-temperature loads.
Cold chain transportation’s 11% CAGR is the symptom of that pressure. The headline market growth of 5.91% smooths across the slower-growing storage segment and the faster-growing transport segment. For sourcing directors planning 2026 capacity, the transport-cost line is where the squeeze shows up first because new reefer fleet capacity takes 18 to 24 months to build out, and the e-commerce platforms are expanding now.
Where the capex goes if the central subsidy does not return
The Ministry of Food Processing Industries has indicated interest in a successor scheme but has not published terms or a timeline. If the scheme is renewed in current form, the project pipeline that the existing 376 approvals represent can complete on schedule and the additional capacity comes online through 2027. If the scheme is not renewed, the residual projects face a financing gap that the private market will price aggressively. Mordor’s analysis notes that private equity activity in Indian cold chain accelerated through 2025, with several specialist funds raising India-focused vehicles in the US$200 million to US$500 million range.
Private capital changes the operator mix. Specialist funds tend to consolidate around integrated platform plays, which favours large operators with national footprints and squeezes out the sub-scale regional players that the central scheme deliberately included. For e-commerce groceries, that consolidation might lower per-unit costs but raises concentration risk: if national operators set service terms, smaller retailers and producer organisations face take-it-or-leave-it contracting.
What sourcing directors should plan around
Sourcing directors with India exposure should plan 2026 cold chain capacity on two working assumptions. First, the published market size figure of US$24.85 billion is more useful read as a floor than a ceiling, because quick-commerce grocery expansion is accelerating the demand curve faster than the operator pipeline can deliver. Second, the operator mix is likely to consolidate as central subsidy retreats and private capital takes its place. Both assumptions argue for testing service terms with national operators on multi-year contracts while the market is still fragmented enough to negotiate, rather than after consolidation has set rates.
The Ministry of Food Processing Industries’ decision on a successor scheme will be the single most important policy development for the sector in 2026. Operators may want to plan for both outcomes while that decision is pending.