India's warehousing landscape is expanding, with Tier II-III cities emerging as new powerhouses. As of 2024, India's total warehousing stock has reached 533.1 million sq. ft, with emerging Tier II-III cities now contributing approximately 100 million sq. ft, or about 18.7 per cent. This shift represents a fundamental change in the country's logistics map towards a hub-and-spoke model as envisioned during the Goods and Service Tax (GST) implementation.
"The Indian warehousing market has experienced remarkable growth in major cities since implementing GST. Growth is expanding to emerging Tier II-III cities as a hub and spoke model is playing out. The emerging cities saw a noteworthy 100 million sq. ft. of stock in 2024, a fourfold increase since 2017. At JLL, we anticipate this momentum continuing, fueled by critical infrastructure initiatives linking these emerging cities with major consumption hubs. This rapid development creates investment opportunities for investors and developers in the logistics sector. This trend is not just reshaping India's logistics landscape, but also offering decent returns for those ready to capitalise on this burgeoning market," said Yogesh Shevade, Head – Logistics & Industrial, India, JLL.
Several factors drive the growth in these emerging cities. The e-commerce boom, particularly the widespread 'click and buy' trend, is transforming India's warehousing. This has led to increased demand for fulfilment centres that are closer to end consumers. Companies are also setting up smaller warehouses in these cities to improve delivery times and reduce logistics costs. Due to lower population density, these cities offer access to larger spaces, ideal for warehouses near consumption centres.
Concurrently, infrastructure initiatives such as PM Gati Shakti, Bharatmala, Sagarmala, UDAN Scheme, and the development of freight corridors have optimised distribution networks. Programs such as Make in India, Digital India, and the National Logistics Policy have fostered conducive manufacturing ecosystems across the country. Introducing Production-Linked Incentives (PLI) and Design-Linked Incentives (DLI) schemes has incentivised companies to set up manufacturing facilities in these cities. This shift represents a fundamental transformation in India's logistics landscape. It offers new opportunities for businesses to optimise supply chains, reduce costs, and improve delivery times. As Tier II-III cities continue to grow in importance, they are reshaping the competitive dynamics of India's logistics sector and driving the future growth of the warehousing industry.
