India Logistics Real Estate Faces New Sourcing Test

India’s logistics and industrial property market is entering a new phase as companies rethink where they manufacture, store and distribute goods. The shift from lowest-cost sourcing towards resilient, diversified supply chains is spreading demand beyond major metros, putting pressure on cities to provide better transport, power, digital networks and well-planned industrial land.

The change is being driven by repeated disruptions to global trade. Businesses are increasingly seeking suppliers and facilities that reduce exposure to long shipping routes, concentrated production and geopolitical shocks. For India, this creates an opportunity to attract manufacturing and distribution activity, but also raises questions about how quickly urban infrastructure can accommodate that growth. The property market is already showing signs of this transition. India’s warehousing stock crossed 610 million sq ft in 2025, while annual net absorption reached about 67 million sq ft. Although the largest cities still dominate, emerging markets are gaining a larger role as companies seek locations closer to consumers and production centres. Demand has also moved beyond conventional storage. Industrial and logistics leasing across India’s top eight cities reached 36.2 million sq ft in the first half of 2026, an 18% annual increase. Manufacturing has become an important source of demand, signalling that warehouses are increasingly being combined with assembly, processing and other industrial functions.

The expansion also brings a regulatory question. The Real Estate (Regulation and Development) Act, or RERA, primarily covers specified real estate projects involving sale to buyers. Pure lease-based warehouse developments may fall outside its core framework, while projects involving sale of plots or built-up units can raise different compliance requirements. That distinction matters as industrial and mixed-use developments become more complex. Meanwhile, digital commerce is adding another layer of demand. In March 2026, 66 WTO members covering about 70% of global trade agreed on interim arrangements to advance the WTO Agreement on Electronic Commerce. More digital trade means faster fulfilment networks and greater demand for facilities located close to dense consumer markets.

India’s expanding trade links are also strengthening its position in diversified supply chains. The UK-India trade agreement entered into force in July 2026, while the India-EU trade agreement was concluded earlier this year. For cities, however, logistics growth cannot be measured only through leasing volumes. New industrial clusters need reliable electricity, freight connectivity, water management, worker housing and efficient public transport. Without these, faster supply chains could simply shift congestion, land pressure and emissions into urban fringes. The next phase of India’s logistics expansion will therefore depend on whether infrastructure and planning keep pace with commercial demand. The strongest locations are likely to be those where trade efficiency, environmental resilience and everyday urban needs can develop together.

Also Read: India RERA Shapes A New Real Estate Investment Cycle

India Logistics Real Estate Faces New Sourcing Test