Sunday, 19 October 2025
India’s logistics landscape is transforming at a speed few could have predicted a decade ago. Warehousing, once an overlooked part of the country’s industrial backbone, has become one of its fastest-growing real estate sectors — a shift fuelled by e-commerce expansion, manufacturing growth, and the need for better supply chain efficiency. Yet, behind the record numbers lies a set of challenges that could shape the next phase of India’s growth story.
Across the country’s major cities — from Delhi to Mumbai, Bengaluru to Pune — the demand for large, modern logistics facilities has surged. Developers have raced to keep up, pushing India’s total warehouse space to well over 500 million square feet in 2025. About three-quarters of new construction now meets the higher standards expected by institutional investors and multinational tenants. Even smaller cities like Indore, Lucknow, and Coimbatore are seeing new industrial clusters emerge, signalling that logistics is no longer confined to India’s major metros.
Investors have taken notice. Global funds and local developers alike have poured money into new logistics parks and cold storage facilities, betting on the sector’s long-term potential. Capital inflows into the segment nearly tripled in 2024, with major institutional players securing large tracts of land along new expressways and freight corridors. Analysts expect India’s total warehouse capacity to cross 600 million square feet within two years if construction continues at its current pace.
Still, the rapid expansion has exposed familiar growing pains. The most pressing issue is land — not the lack of it, but the difficulty of assembling large, connected parcels near highways or ports. Prices for industrial plots have climbed sharply, and the approval process remains slow and unpredictable. Many projects stall for months due to disputes or regulatory delays, eroding the pace of development.
Even where land is available, infrastructure remains uneven. India’s main freight corridors have improved dramatically, but smaller access roads and last-mile links often lag behind. Developers frequently find themselves paying for road upgrades to make projects viable. Rising interest rates have also made financing more expensive, squeezing smaller builders who lack the deep pockets of institutional players.
Labour and training are emerging as another bottleneck. While India has a large workforce, logistics requires specialised skills in warehouse management, automation, and cold-chain operations. Many smaller cities — where new logistics parks are being built — struggle to find trained workers. Industry groups warn that unless workforce development keeps pace, operations could fall short of global efficiency standards.
Sustainability adds a further layer of complexity. Tenants increasingly demand energy-efficient, low-carbon facilities fitted with solar panels, rainwater harvesting systems, and electric vehicle charging. While this shift is positive for the environment, the cost of building “green” warehouses remains high, and many developers are still adjusting to the new economics of sustainable construction.
Despite these hurdles, the outlook for India’s warehousing industry remains overwhelmingly positive. The sector has matured rapidly, evolving from fragmented godowns into an organised, professionally managed market that attracts global investors. As the economy grows and consumption patterns shift, the need for efficient logistics networks will only deepen.
But for the sector to realise its full potential, it will need more than investment — it will need coordination. Faster land approvals, smoother regulation, and targeted skill development are essential to sustain momentum. If these structural issues are addressed, India could soon emerge as one of the world’s largest and most modern warehousing markets — not just in size, but in sophistication.
Disclaimer: Figures are approximate and provided for informational purposes only.
