India`s Top-Tier Warehousing to See 2X Growth by 2028 Amid Tight Vacancy by CareEdge Ratings
Synopsis
• In 2025, the global economic landscape remained intricate, influenced by enduring inflationary pressures, shifting central bank policies, newly imposed tariffs by the United States, and persistent geopolitical tensions. Amid these global challenges, India continued to demonstrate economic resilience. While the Reserve Bank of India (RBI) revised its GDP growth forecast for FY2026 from 6.7% to 6.5%, its growth trajectory remains comparatively strong when measured against other major economies.
• A key driver of India's sustained economic growth is the government's strong emphasis on manufacturing and infrastructure development, which has fostered a conducive environment for the expansion of commercial real estate, particularly in the warehousing sector. This momentum is supported by strategic policy initiatives like Make in India, the Production Linked Incentive (PLI) scheme, the National Manufacturing Policy, and the National Logistics Policy, which have collectively spurred industrial activity and improved supply chain efficiency.
• Through this opinion piece, CareEdge Ratings delves into noteworthy trends in the warehouse leasing segment, future growth drivers, credit rating landscape and the medium-term outlook for the segment.
• The positive impact of the policy measures is evident in the growing demand for Grade A warehouse space. While e-commerce led the growth right after the pandemic, the 3PL and manufacturing sectors have been the key demand drivers over the past four years and will continue to be so in 2024. This rising demand in the Grade A warehouses has decreased vacancy levels to about 8%. The Union Budget 2026 provided additional support by announcing infrastructure support for air cargo warehousing and streamlined customs procedures. These steps are expected to enhance cargo efficiency, reduce delays and costs, and minimise the spoilage of perishable goods.
• Amidst the rapid infrastructure development in Tier 2 & Tier 3 cities, many companies are expanding their reach to these cities. Their proximity to major markets, improving infrastructure, and lower land and construction costs make them attractive for warehouse investment.
• CareEdge Ratings anticipates that India’s total grade A warehousing stock will exceed 420 million square feet (msf) by 2028, with vacancy rates expected to stay below 10%.
The Quiet Revolution in India’s Supply Chain
India's warehousing sector has been rapidly transforming since CY2020, evolving from a fragmented and traditional industry into an organised segment central to the nation's economic growth. This shift is propelled by escalating demand for modern, large-scale warehouses, strengthened by significant private equity investments. The surge in demand for Grade A warehousing spaces is primarily driven by the expansion of third-party logistics (3PL) providers, manufacturing sectors, and the burgeoning e-commerce industry, leading to historically low vacancy rates. Additionally, the rise of quick-commerce intensifies the need for strategically located in-city warehouses to facilitate swift deliveries. Exhibit 1 shows the vacancy trends for 2017-2024 (E).
Above views are of the author and not of the website kindly read disclaimer
