The Indian logistics sector is poised for a significant transformation and evolving supply chains are expected to drive a projected demand for around 1.2 billion sq ft of warehouse space by 2027 spanning across Grade A, B, and C facilities in cities across the country, showed a JLL India and Miebach Consulting, India study.
This growth is not only about quantity but also quality, with a significant shift towards Grade A warehousing, where stock is expected to rise 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 the primary drivers of this warehousing boom, particularly for high-quality Grade A spaces. However, the landscape of growth is changing. While major cities have traditionally dominated the warehousing sector, tier II and III cities are now emerging as the next frontier. The study reveals a striking 41% increase in warehouse space absorption in Tier II plus markets from 2022 to 2023,
“Warehousing absorptions in tier II and III cities clocked 16.4 million sq ft in 2023, up 41% from 11.6 million sq ft in 2022, signalling a significant shift in the geographical distribution of logistics infrastructure. The sector's evolution is further propelled by urban fulfilment needs which are estimated to require an additional 35 million sq ft pan-India by 2027,” Sanjay Bajaj, Senior Managing Director of Logistics & Industrial, India, JLL.
According to him, as the industry adapts to these changes, it is also embracing Environmental, Social and Governance (ESG) compliance and the National Logistics Policy's aim to reduce logistics costs to 10% of GDP, setting the stage for a more efficient, sustainable, and technologically advanced warehousing landscape in India.
The rise of urban fulfilment centers is another key trend identified in the report. By 2027, the combined space requirement for these centers is estimated to exceed 35 million sq. ft across India, highlighting the growing need for efficient last-mile delivery solutions in urban areas.
"Warehousing has undergone a remarkable transformation, evolving from simple storage facilities to becoming the linchpin in organizations’ go-to-market strategies and customer satisfaction efforts. The past decade has witnessed an unprecedented surge in demand for high-quality warehouse infrastructure,” said Shubhendu Kumar, Director, Miebach Consulting, India. “While warehousing has historically been a fragmented industry, the increasing need for superior infrastructure and larger space parcels is driving significant institutional participation in the sector.”
By 2026, India is projected to be among the top 6 users of warehouse automation systems worldwide, with the market expected to reach $2 billion annually. This trend towards automation reflects the sector's drive for increased efficiency and competitiveness on the global stage.
Government initiatives are also playing a crucial role in shaping this transformation. The National Logistics Policy, which aims to reduce logistics costs to 10% of GDP, is creating a more favourable environment for organized and standardized warehouse developments. This policy is expected to streamline operations and attract further investments into the sector.
As the industry evolves, sustainability is becoming an increasingly important factor. Many leading developers are now following ESG norms in their projects, indicating a rise in ESG-certified warehousing projects across India. This shift towards sustainable practices is likely to reshape the sector's future trajectory.
India's warehousing sector is experiencing a significant shift, with Tier II and III cities emerging as the new hotspots for growth and opportunity. This trend is reshaping the logistics landscape and driving the transformation of the industry.
While Tier II+ towns account for a higher share of consumer demand, especially in high-volume product categories, the warehouse stock - particularly Grade A facilities - remains concentrated in Tier I locations. This mismatch highlights the enormous untapped potential in Tier II+ markets.
The most striking is the impact on delivery times. As warehouse nodes expanded from Tier I to Tier II cities between 2014 and 2022, the average delivery time in E-commerce has plummeted from 9 days to just 3 days - a remarkable two-thirds reduction. This dramatic improvement in efficiency demonstrates the tangible benefits of developing warehousing infrastructure in Tier II locations.
As India continues its economic ascent, the warehousing sector stands at the forefront of this growth story, poised to play a pivotal role in supporting the country's ambitions and transforming its supply chain dynamics.
This growth is not only about quantity but also quality, with a significant shift towards Grade A warehousing, where stock is expected to rise 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 the primary drivers of this warehousing boom, particularly for high-quality Grade A spaces. However, the landscape of growth is changing. While major cities have traditionally dominated the warehousing sector, tier II and III cities are now emerging as the next frontier. The study reveals a striking 41% increase in warehouse space absorption in Tier II plus markets from 2022 to 2023,
“Warehousing absorptions in tier II and III cities clocked 16.4 million sq ft in 2023, up 41% from 11.6 million sq ft in 2022, signalling a significant shift in the geographical distribution of logistics infrastructure. The sector's evolution is further propelled by urban fulfilment needs which are estimated to require an additional 35 million sq ft pan-India by 2027,” Sanjay Bajaj, Senior Managing Director of Logistics & Industrial, India, JLL.
According to him, as the industry adapts to these changes, it is also embracing Environmental, Social and Governance (ESG) compliance and the National Logistics Policy's aim to reduce logistics costs to 10% of GDP, setting the stage for a more efficient, sustainable, and technologically advanced warehousing landscape in India.
The rise of urban fulfilment centers is another key trend identified in the report. By 2027, the combined space requirement for these centers is estimated to exceed 35 million sq. ft across India, highlighting the growing need for efficient last-mile delivery solutions in urban areas.
"Warehousing has undergone a remarkable transformation, evolving from simple storage facilities to becoming the linchpin in organizations’ go-to-market strategies and customer satisfaction efforts. The past decade has witnessed an unprecedented surge in demand for high-quality warehouse infrastructure,” said Shubhendu Kumar, Director, Miebach Consulting, India. “While warehousing has historically been a fragmented industry, the increasing need for superior infrastructure and larger space parcels is driving significant institutional participation in the sector.”
By 2026, India is projected to be among the top 6 users of warehouse automation systems worldwide, with the market expected to reach $2 billion annually. This trend towards automation reflects the sector's drive for increased efficiency and competitiveness on the global stage.
Government initiatives are also playing a crucial role in shaping this transformation. The National Logistics Policy, which aims to reduce logistics costs to 10% of GDP, is creating a more favourable environment for organized and standardized warehouse developments. This policy is expected to streamline operations and attract further investments into the sector.
As the industry evolves, sustainability is becoming an increasingly important factor. Many leading developers are now following ESG norms in their projects, indicating a rise in ESG-certified warehousing projects across India. This shift towards sustainable practices is likely to reshape the sector's future trajectory.
India's warehousing sector is experiencing a significant shift, with Tier II and III cities emerging as the new hotspots for growth and opportunity. This trend is reshaping the logistics landscape and driving the transformation of the industry.
While Tier II+ towns account for a higher share of consumer demand, especially in high-volume product categories, the warehouse stock - particularly Grade A facilities - remains concentrated in Tier I locations. This mismatch highlights the enormous untapped potential in Tier II+ markets.
The most striking is the impact on delivery times. As warehouse nodes expanded from Tier I to Tier II cities between 2014 and 2022, the average delivery time in E-commerce has plummeted from 9 days to just 3 days - a remarkable two-thirds reduction. This dramatic improvement in efficiency demonstrates the tangible benefits of developing warehousing infrastructure in Tier II locations.
As India continues its economic ascent, the warehousing sector stands at the forefront of this growth story, poised to play a pivotal role in supporting the country's ambitions and transforming its supply chain dynamics.
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