India’s A-grade warehouses are driving the sector’s exponential growth amid an e-commerce boom

In recent years, India has witnessed a remarkable revival in the warehousing sector, and the cornerstone of this revival has been Class A facilities. In response to the exponential growth of the e-commerce, retail and manufacturing sectors, there is a growing demand for high-quality warehousing space, especially in Class A facilities. characterized by modern amenities and advanced logistics systems.

According to IMARC Group reports, the Indian warehousing market size reached INR 1,378.7 billion in 2023 and is expected to grow significantly to reach INR 3,107.5 billion by 2032. This projection reflects a CAGR of 9.2% over the period from 2024 to 20322. According to the Knight-Frank India Warehousing Market Report 2023, approximately 2.1 million square meters (23 million square feet) of warehousing space was transacted in the first half of fiscal 2024 (April to September 2023), of which 53% had space in class A warehouse spaces.

In parallel with the rapid growth of the Class A warehousing industry in India, positive government policies have played a key role in shaping the sector’s trajectory. The Indian government’s proactive approach to strengthening the logistics and industrial landscape has played a key role in attracting investment, supporting innovation and improving the regulatory framework. Initiatives such as the National Logistics Policy, Make in India and the introduction of Goods and Services Tax (GST) have laid a solid foundation for the expansion of the warehousing sector. Moreover, India’s ambitious vision to position itself as a global logistics hub highlights the importance of improving infrastructure, making it easier to do business and promoting sustainable practices throughout the supply chain. By aligning policy objectives with industry imperatives, India can become a model of excellence in the global logistics arena, driving economic growth and supporting inclusive development. In this dynamic context, let’s understand the key opportunities and challenges in the industry.

Opportunities that drive growth

Global and domestic institutional investments: India’s growing logistics and industrial sector has attracted significant investment from both global and domestic investors. This inflow of capital is not limited to tier 1 cities but is permeating into tier 2 and 3 cities, which are emerging as key consumption and e-commerce hubs.

Advances in technology and automation: Large Class A warehouse facilities leverage technological innovations and automation to optimize operations and increase efficiency. City logistics is gaining importance due to the demand for on-demand solutions and fast deliveries.

Omnichannel retail: The convergence of traditional warehouses and retail stores into fulfillment centers is revolutionizing the retail landscape through omnichannel sales. This strategic integration enables effective inventory management, streamlined operations and cost optimization.

Challenges on the horizon

Regulatory complexities: The regulatory framework governing warehousing in India is fragmented and marked by inconsistent enforcement practices across states and regions. Harmonizing regulations and ensuring their uniformity remains a pressing challenge for the industry.

Infrastructure gaps: Despite the sector’s growth trajectory, inadequate transport and logistics infrastructure poses significant challenges in ensuring seamless connectivity to major transport hubs. Filling these infrastructure gaps is essential to optimize supply chains and increase efficiency.

Land use restrictions: In cities with limited land supply and rising land costs, the use of multi-story warehouses is a viable solution. However, switching to vertical storage requires innovative design and meticulous planning to effectively maximize land use.

In summary, while India’s Class A warehousing sector offers promising opportunities for investors and stakeholders, navigating it requires skillfully addressing regulatory complexities, bridging infrastructure gaps and meeting specialized needs. By leveraging technological innovation, supporting strategic partnerships and adopting sustainable practices, the Indian warehousing sector can realize its full potential as a cornerstone of economic growth and industrial development in the country.

This article was written by Varun Gada, Director, LP Logiscience. All opinions expressed are the author’s own and do not necessarily reflect the views of Logistics Insider.