India’s Logistics Sector Expands Beyond Major Cities

India’s Logistics Sector Expands Beyond Major Cities

India’s logistics and warehousing sector is undergoing a significant transformation, fuelled by a mix of government initiatives, infrastructure development, and evolving consumer demands. As the sector expands at an impressive pace, emerging tier 2 and tier 3 cities are quickly becoming pivotal to this growth, marking a substantial shift in the country’s logistics landscape.

The report by JLL, India’s total warehousing stock surged to 533.1 million square feet in 2024, with approximately 100 million square feet, or 18.7 percent, now attributed to tier 2 and tier 3 cities. This marks a turning point for cities like Kanpur, Jaipur, and Lucknow, which are emerging as vital hubs for logistics and distribution. The trend is not just a sign of infrastructural growth but a reflection of the country’s shifting consumption patterns, with demand for faster and more efficient delivery networks increasing. One of the key enablers of this transformation has been the development of a hub-and-spoke model, further supported by the implementation of the Goods and Services Tax (GST). This model allows businesses to streamline their supply chains by optimising warehouse locations closer to end consumers, especially in rapidly developing regions. As e-commerce continues to rise in prominence, there has been an increased need for fulfillment centres that can cater to local demands, enhancing last-mile delivery efficiency and significantly reducing logistics costs.

This shift in logistics strategies is not only improving the speed of delivery but also contributing to cost reductions by placing warehouses closer to the point of consumption. The result is a more agile supply chain that can better respond to the increasing demands of online shoppers. According to industry projections, the absorption of industrial and logistics space is expected to surpass last year’s remarkable growth rate of 25 percent. Experts predict that 2025 could see even stronger growth, reflecting the rapid evolution of the sector. The logistics and warehousing sector plays a critical role in India’s economy, contributing around 13-14 percent to the national GDP. This growth is particularly timely, as India’s broader economic expansion necessitates an efficient and modern logistics infrastructure. In alignment with this, Union Minister of Consumer Affairs, Food and Public Distribution, Pralhad Joshi, highlighted the importance of the sector, stating that the government is keen to reduce India’s logistics costs from the current 13-14 percent to global standards of 8 percent.

The National Logistics Policy (NLP) and the PM Gati Shakti Programme are expected to drive these reforms. The aim is to create a more seamless, connected, and affordable logistics network across the country. As the government’s focus sharpens on infrastructure development, the sector is likely to experience even more robust growth in the coming years, supported by substantial investments, digital transformation, and policy support.
While the future looks promising, experts and industry leaders stress the importance of maintaining sustainability in this rapid expansion. As cities evolve and new logistics hubs sprout across the country, careful planning is necessary to ensure that these developments are environmentally responsible, socially equitable, and aligned with India’s broader goals of creating green and sustainable urban spaces.

The logistics sector’s expansion into emerging cities represents a critical step forward in India’s journey towards becoming a global economic powerhouse. With continued policy backing, investment in infrastructure, and technological advancements, this growth is set to reshape the country’s economic landscape and contribute to its ongoing prosperity.