India's emergence as a global manufacturing hub is driving a significant increase in warehousing demand, with sectors related to manufacturing now accounting for 25% of total domestic warehousing demand in the first half of 2024, up from 15% in 2019. Key factors include the adoption of the "China plus one" strategy and supportive government policies like the production-linked incentive scheme. Total leasing of warehousing space reached 4.1 million square feet, with Pune, Delhi-NCR, and Kolkata showing notable growth. Regulatory reforms have attracted major investments from global manufacturers, further strengthening India's position in the manufacturing sector.
India's emergence as a prominent global manufacturing hub is significantly boosting the demand for warehousing space, particularly from manufacturing-related sectors. This trend has been propelled by multinationals establishing factories within the country, eager to capitalise on India's burgeoning market and favourable economic conditions. Earlier this week, it was noted that the share of demand from these sectors had surged to 25% of total domestic warehousing demand in the first half of calendar 2024, marking a substantial increase from 15% in 2019.
Several critical factors have contributed to this impressive growth. A notable driver is the adoption of the "China plus one" strategy by multinationals, which encourages companies to diversify their supply chains and reduce reliance on China. This shift has created a ripple effect, prompting increased investments in India. Furthermore, supportive policies introduced by the Indian government, including the production-linked incentive (PLI) scheme, have played a vital role. The PLI scheme currently spans 14 sectors, aimed at enhancing manufacturing capabilities and attracting foreign direct investment.
In the first half of 2024, total leasing of warehousing space from manufacturing-related sectors reached an impressive 4.1 million square feet, according to CBRE South Asia, a reputable real estate consulting firm. Their report, titled "Fortifying India's I&L Landscape with a New Manufacturing Growth Formula," provides detailed insights into the evolving landscape. It revealed that Pune has seen the most significant increase in warehousing and industrial space take-up by manufacturers, with its share growing from 6% in 2019 to 13% in the first half of 2024.
Additionally, major cities such as Delhi-NCR and Kolkata have also experienced notable growth in warehousing demand, with their shares reaching 18% and 12%, respectively, during the same period. This trend underscores the shifting dynamics in India's warehousing sector, as various regions adapt to the demands of expanding manufacturing operations.
Industry experts have emphasised that the Indian government has undertaken substantial regulatory reforms and improved the overall business environment, which has proven instrumental in attracting significant investments from global manufacturing giants. Companies like Apple, Samsung, and Boeing have made notable commitments in the Indian manufacturing sector, reinforcing the country's position as an attractive destination for foreign investment. The convergence of these factors not only highlights the increasing demand for warehousing space but also reflects the broader trends shaping India's economic landscape as it positions itself as a key player in the global manufacturing arena.
India's rise as a global manufacturing hub is set to continue fuelling the demand for warehousing space across various sectors. The strategic shift towards diversifying supply chains, coupled with supportive government initiatives, has created a robust environment for investment and growth. As cities like Pune, Delhi-NCR, and Kolkata witness significant increases in warehousing leasing, the landscape is evolving to accommodate the needs of multinational manufacturers. With ongoing regulatory reforms and the influx of foreign investments, India's manufacturing sector is poised for further expansion, solidifying its position in the global economy.
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