Tier II-III Cities Drive Growth in Warehousing Sector

New Delhi, Feb 14 (KNN) India's total warehousing stock reached 533.1 million square feet in 2024, with emerging tier II and III cities contributing approximately 100 million sq ft, accounting for 18.7 per cent of the total stock.

This shift signifies a major transformation in India's logistics landscape, moving towards a hub-and-spoke model aimed at enhancing last-mile delivery efficiency, a vision aligned with the implementation of the Goods and Services Tax (GST).

Since GST’s introduction, the warehousing sector has flourished in major metropolitan areas. Now, the momentum is shifting to smaller cities, where stock has grown four-fold since 2017, reaching 100 million sq ft in 2024, according to a report by real estate firm JLL released on Thursday.

The rise of e-commerce, particularly the ‘click and buy’ trend, has been a primary driver of this expansion, pushing companies to establish fulfillment centers closer to consumers.

Additionally, businesses are setting up smaller warehouses in these cities to reduce logistics costs and improve delivery timelines.

A key advantage of these emerging cities is their ability to provide larger warehouse spaces due to lower population density, allowing storage facilities to be positioned near consumption hubs.

"This momentum is expected to continue, fueled by critical infrastructure projects linking these cities with major commercial centers," said Yogesh Shevade, Head of Logistics and Industrial, India, JLL.

He emphasised that these developments are unlocking significant investment opportunities for logistics sector stakeholders.

Government initiatives such as PM Gati Shakti, Bharatmala, Sagarmala, the UDAN Scheme, and dedicated freight corridors have streamlined distribution networks, facilitating sectoral growth. Meanwhile, policies like ‘Make in India,’ ‘Digital India,’ and the National Logistics Policy have strengthened the manufacturing ecosystem.

Furthermore, production-linked incentive (PLI) and design-linked incentive (DLI) schemes have encouraged companies to establish manufacturing facilities in tier II-III cities, reinforcing the warehousing expansion trend.

“This shift is a game-changer for India's logistics industry, optimising supply chains, reducing costs, and accelerating delivery times.

As smaller cities grow in prominence, they are redefining competitive dynamics and propelling the warehousing sector into a new era of expansion,” the report concluded.

(KNN Bureau)