India’s Logistics & Warehousing Sector Expands With Tier 2 & 3 Cities Leading Growth

India’s logistics and warehousing industry is undergoing rapid transformation, driven by infrastructure upgrades, policy reforms, technological advancements, and evolving consumer behavior.

A key factor in this growth is the increasing role of tier 2 and 3 cities, which are emerging as crucial hubs in the sector’s expansion.

According to a JLL report, India’s total warehousing stock reached 533.1 million square feet in 2024, with tier 2 and 3 cities contributing nearly 100 million square feet, accounting for 18.7% of the total space.

This shift is reshaping the logistics landscape as these cities become central to distribution networks.

The expansion of a hub-and-spoke model, bolstered by the Goods and Services Tax (GST), has significantly enhanced warehousing capacity in smaller cities, particularly to meet the growing demand from the e-commerce sector.

With online shopping on the rise, companies are setting up fulfillment centers closer to consumers, further fueling demand, the report highlighted.

Additionally, the relocation of supply chains to these regions is streamlining last-mile delivery while cutting logistics costs, improving efficiency across the sector.

Logistics Space Absorption To Exceed 2024 Growth

An ANAROCK Capital report predicts that industrial and logistics space absorption in 2025 could surpass last year’s 25% annual growth rate.

The report also pointed to rising investments, digital integration, and policy initiatives as key drivers propelling the logistics sector forward.

Currently contributing around 13-14% to India’s GDP, the logistics and warehousing sector continues to expand, aligning with the nation’s rapid economic progress.

Union Minister of Consumer Affairs, Food, and Public Distribution, Pralhad Joshi, emphasized that with the growing e-commerce market and infrastructure development, the sector is set to play a pivotal role in economic growth.

At a recent event, he highlighted the government’s efforts under the National Logistics Policy (NLP) and the PM Gati Shakti Programme to reduce logistics costs from the current 13-14% to the global benchmark of around 8%.

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