India’s warehousing sector on the rise, driven by e-commerce

India’s warehousing industry is expanding and is driven by e-commerce, 3PL, and omni-channel retail. Demand is set to reach 1.2 billion sq ft by 2027, with a shift towards Grade A facilities and growing activity in Tier II and III cities. Automation, sustainability, and government policies are reshaping the sector, aiming to reduce logistics costs and enhance efficiency.

India’s logistics sector is set for rapid transformation, with evolving supply chains driving an estimated demand for 1.2 billion sq ft of warehouse space by 2027 across Grades A, B, and C facilities, according to a study by JLL India and Miebach Consulting. The shift is not just quantitative but also qualitative, as Grade A stock is projected to grow from 290 million sq ft in 2023 to 400 million sq ft by 2027.

The boom in warehousing is fueled by e-commerce, Third-Party Logistics (3PL), and omni-channel retail, especially for premium Grade A spaces. Traditionally focused on major cities, the sector is expanding into Tier II and III markets, where warehouse space absorption surged by 41% from 11.6 million sq ft in 2022 to 16.4 million sq ft in 2023. “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,” said Sanjay Bajaj, Senior Managing Director, Logistics & Industrial, India, JLL.

The industry is increasingly aligning with ESG standards and the National Logistics Policy, which aims to reduce logistics costs to 10% of GDP, driving sustainable growth. The rise of urban fulfilment centers highlights the growing demand for efficient last-mile delivery solutions, expected to require over 35 million sq ft by 2027.

“Warehousing has undergone a remarkable transformation, evolving from simple storage facilities to becoming the linchpin in organizations’ go-to-market strategies,” said Shubhendu Kumar, Director, Miebach Consulting, India. Institutional players are also entering the sector as demand grows for superior infrastructure and larger parcels of space.

By 2026, India is expected to be among the top six users of warehouse automation, with the market reaching US $ 2 billion annually. Government policies and sustainable practices will further reshape the sector, as Tier II and III cities emerge as new growth hubs, unlocking significant potential and boosting efficiency in delivery operations.