India’s Warehousing Demand Surges Amid Manufacturing Boom and Govt Incentives

India's demand for warehousing in key sectors has risen from 15% in 2019 to 25% in 2024, driven by government policies and a global shift from China. Cities like Pune, Delhi-NCR, and Kolkata are major beneficiaries. This growth strengthens the nation's manufacturing sector, which employs over 27 million people.

The demand for warehousing in India from sectors such as engineering, electronics, and auto manufacturing has surged from 15% in 2019 to 25% in the first half of 2024, according to a CBRE report. This notable increase is largely attributed to favorable government policies, including the Production Linked Incentive (PLI) scheme, and a global strategic pivot popularly known as 'China + 1,' aimed at diversifying supply chains away from China.

Total warehousing leasing from these sectors reached a remarkable 4.1 million sq. ft. in the first half of 2024. Pune, in particular, has seen a significant rise in demand, with its share escalating from 6% in 2019 to 13% in 2024. Delhi-NCR and Kolkata have also observed substantial hikes, with warehouse demand hitting 18% and 12%, respectively.

India's engineering and manufacturing sectors have rented 11% of the total warehouse space in the first half of 2024, an uptick from 8% in 2023. Key drivers include domestic appliances, auto components, and the automobile industry, all reflecting strong demand.

Manufacturing is pivotal to India's economic growth, contributing 14% to the GDP and employing over 27 million people. Anshuman Magazine, Chairman & CEO of CBRE, remarked, 'India's manufacturing sector is on the brink of a transformation, drawing significant global attention.' Continued economic development in leading and emerging Asia Pacific markets will further boost consumer demand for manufactured goods, propelling the sector's growth.

Initiatives like the GatiShakti National Master Plan aim to streamline supply chains, while the National Logistics Policy focuses on sustainable and cost-effective transport modes. Additional government measures such as corporate tax cuts, GST reforms, and R&D tax benefits enhance India's competitiveness.

Rami Kaushal, Managing Director of Consulting & Valuation Services at CBRE, noted, 'India's strong industrial infrastructure is crucial for advancing its manufacturing sector. It not only ensures ease of business but also fosters collaboration and enhances productivity.'

Ram Chandnani, Managing Director of Advisory & Transactions Services at CBRE India, added, 'India's focus on trade agreements offers immense potential for the manufacturing sector, acting as a catalyst for trade. This is a golden opportunity for Indian manufacturers to diversify beyond services and capture a larger share of the global manufacturing market.'

(With inputs from agencies.)