India’s logistics sector is undergoing a major transformation, with evolving supply chains projected to generate demand for 1.2 billion sq ft of warehousing space by 2027, according to a joint study by JLL India and Miebach Consulting. This demand will encompass Grade A, B, and C facilities across the country.
A notable shift towards high-quality infrastructure is driving the growth, with Grade A warehousing stock expected to increase from 290 million sq ft in 2023 to 400 million sq ft by 2027. E-commerce, third-party logistics (3PL), and omni-channel retail are emerging as primary drivers of this surge, especially in Tier I and increasingly in Tier II and III cities.
Warehouse absorption in Tier II and III markets saw a 41% rise from 11.6 million sq ft in 2022 to 16.4 million sq ft in 2023. This shift signals a growing emphasis on expanding logistics infrastructure beyond metro cities to meet rising regional demand.
"Urban fulfillment centers are playing a pivotal role, with an estimated additional 35 million sq ft required across India by 2027 to meet last-mile delivery needs," said Sanjay Bajaj, Senior Managing Director, Logistics & Industrial, India, JLL. He highlighted the sector's growing focus on Environmental, Social, and Governance (ESG) compliance and the National Logistics Policy, which aims to reduce logistics costs to 10% of GDP.
The rise of automation is another key trend shaping the sector. By 2026, India is expected to become one of the top six users of warehouse automation systems globally, with the market estimated to reach $2 billion annually. This reflects the industry’s efforts to enhance efficiency and competitiveness on the global stage.
Government initiatives, particularly the National Logistics Policy, are also streamlining operations and encouraging organised development in the warehousing sector. These policies are expected to attract further investments and foster a more standardized, sustainable industry.
“The warehousing industry has evolved from fragmented storage solutions into a critical component of companies' go-to-market strategies," said Shubhendu Kumar, Director, Miebach Consulting India. "Institutional players are increasingly entering the market, reflecting the demand for superior infrastructure and larger facilities."
Tier II and III cities are becoming new growth hotspots, reshaping the logistics landscape. Despite these regions accounting for a significant share of consumer demand, most Grade A warehouse facilities remain concentrated in Tier I cities, signaling substantial untapped potential in emerging markets.
The expansion of warehouse nodes from Tier I to Tier II cities between 2014 and 2022 has dramatically improved delivery times in e-commerce, reducing them from 9 days to just 3 days. This efficiency boost highlights the tangible benefits of regional warehousing infrastructure development.
With India’s economic growth accelerating, the warehousing sector is poised to play a vital role in transforming supply chain dynamics, supporting the country’s ambitions, and reshaping logistics across urban and regional markets.
(ET)
