As India’s supply chain landscape evolves, Tier 2 cities are emerging as crucial hubs for cold chain storage, especially in the pharmaceutical and agri-food sectors. The increasing demand for quality healthcare, processed foods, and perishable commodities has amplified the need for robust cold storage infrastructure beyond metro regions. This shift is driving significant transformation, opening up new investment opportunities and highlighting pressing challenges.
Rising Demand: Pharma and Agri-Foods Fuel the Growth
Tier 2 cities such as Indore, Lucknow, Coimbatore, Jaipur, and Nagpur are witnessing a noticeable surge in cold chain investments. The primary drivers include a growing population with rising income levels, improved healthcare accessibility, and greater consumption of processed and fresh agri-produce.
According to a 2024 report by the National Centre for Cold Chain Development (NCCD), India’s cold storage capacity reached 37.4 million metric tonnes, but only 11% of it exists outside metro cities. With Tier 2 and Tier 3 cities accounting for 40% of India’s population, the demand-supply gap in these regions is glaring.
In the pharmaceutical sector, vaccine distribution and biologics storage require temperature-sensitive logistics. During India’s COVID-19 vaccine rollout, cities like Aurangabad and Bhopal played a critical role in last-mile delivery through regional cold hubs. The government’s universal immunization program has further boosted demand for cold chain infrastructure in these areas.
Technological Integration is Transforming the Sector
Another key trend is the rising adoption of smart cold storage solutions. Companies are deploying IoT-enabled temperature monitoring systems, GPS tracking, and real-time inventory management tools. These innovations help reduce spoilage and energy consumption while improving traceability.
For example, Tan90, a Chennai-based startup, has developed portable cold chain boxes that operate without electricity for up to 72 hours. Their solutions have been successfully adopted in Tier 2 cities by small-scale agri-traders and pharmaceutical distributors, ensuring uninterrupted cold storage during transportation and at remote warehouses.
Challenges Hindering Growth
Despite growing interest, several challenges persist. Firstly, high power costs and unreliable electricity in semi-urban areas limit cold chain operations. Secondly, land acquisition for building cold storage warehouses in these cities is often fraught with regulatory bottlenecks. Lastly, skilled manpower for handling sensitive pharmaceuticals or fresh produce is still in short supply.
A study by CRISIL notes that India requires an additional 10 million tonnes of cold storage capacity by 2027, with a major portion needed in Tier 2 and Tier 3 cities to meet growing demand. Yet, only 5% of FPOs (Farmer Producer Organizations) in these areas currently have access to cold chain infrastructure.
Government and Private Sector Interventions
The government has launched initiatives such as the Pradhan Mantri Kisan Sampada Yojana (PMKSY) and the PLI Scheme for Pharmaceuticals, encouraging cold storage investment in underserved regions. Financial subsidies, tax benefits, and infrastructure support have made Tier 2 cities more attractive for logistics firms and cold chain players.
The Road Ahead
As consumption patterns change and health awareness rises, cold chain infrastructure in Tier 2 cities will play an increasingly vital role. Strategic investments in renewable-powered cold storage, skill development, and public-private partnerships are essential to unlock the full potential of these regions.
Ultimately, bridging the cold chain gap in non-metro areas is not just about logistics it’s about enabling healthier lives, reducing food waste, and building resilient rural economies.