India’s warehousing sector shifts focus from capital to execution

The Formalisation of a Fragmented Market

For years, the Indian logistics market operated nearly three to four decades behind developed nations, characterised largely by unorganised and fragmented activity. However, the landscape is catching up at an unprecedented pace due to the formalisation of the economy and critical regulatory reforms.

Current market analysis indicates that while the total size of the Indian warehousing industry stands at roughly 2 billion square feet, only about 10% is considered organised. 

The decisive shift towards Grade-A warehousing began around 2015, accelerated significantly by GST reforms and the entry of large multinational corporations establishing robust operations within the country.

This momentum has created a massive pipeline; the industry is currently constructing approximately 40 to 50 million square feet of Grade-A warehouses annually, with an estimated USD 4-5 billion of capital waiting to be deployed.

From Capital Scarcity to Execution Hurdles

Historically, Indian developers struggled with a lack of local capital, forcing a reliance on bank debt or premature IPOs which stifled scale for decades.

This liquidity crunch has been effectively resolved over the last twenty years by the inflow of private equity and the entry of global institutional investors. Today, the challenge is no longer sourcing funds but rather deploying them effectively.

The new bottlenecks are execution-based: securing land in a country with fragmented ownership, obtaining necessary approvals, and managing resources to complete large-scale projects on time.

Although the broader economy continues to grow at 6% to 8% year-on-year, providing a strong tailwind for demand, these supply-side friction points remain the critical risk factors for investors to monitor.

Decoupling Through Domestic Exits

A significant structural development for the sector is the maturation of India’s domestic capital markets, which have begun to provide reliable alternative exit paths such as REITs.

Previously, exit strategies were heavily dependent on international buyers or fluctuating global market conditions. This shift has effectively decoupled the Indian market from certain global volatilities, giving institutional investors the confidence that they can exit into a domestic market that is absorbing core assets with increasing appetite.

This newfound stability is encouraging the long-term deployment of funds without the traditional fear of liquidity traps.

A Flight to Quality and Talent

The market’s mindset regarding cost has evolved alongside its physical infrastructure. Where there was once skepticism about whether tenants would pay premiums for high-quality assets, data now shows that average rentals have moved from INR 10-12 per square foot to a country-wide average of around INR 25.

This willingness to pay for quality reflects a maturing customer base that prioritises efficiency and compliance over the lowest possible cost. Simultaneously, the influx of international developers is upgrading the local talent pool by introducing global best practices and governance standards.

This knowledge transfer is training hundreds of professionals who are elevating overall industry benchmarks, ensuring that the physical build-out is matched by operational sophistication.

Future Outlook

The growth story for Indian warehousing is structural and long-term, with a projected runway of 15 to 20 years. 

While the current phase is focused on the basic build-out of infrastructure, the next phase will likely see significant modernisation, including multi-layer warehousing and the organisation of the cold chain sector which remains largely untapped.

With over 250 million square feet of Grade-A stock currently available, the headroom for growth remains immense as the market continues to mature.