India’s rise as a global manufacturing hub is driving increased warehousing demand, with multinationals setting up factories. Supportive Government policies and strategic initiatives are attracting investments from global manufacturers. The manufacturing sector’s share of total warehouse leasing grew significantly, reflecting robust demand across key segments like domestic appliances and auto parts. India’s emergence as a global manufacturing hub is fueling warehousing demand from manufacturing-related sectors with multinationals setting up factories in the country. Demand from these sectors climbed to 25% of total domestic warehousing demand in the first half of calendar 2024 from 15% in 2019 led by factors like adoption of the China plus one strategy by multinationals and supportive Indian Government policies such as the Production Linked Incentive (PLI) scheme, which currently covers 14 sectors. During H1 2024, total leasing of warehousing space from manufacturing-related sectors reached 4.1 million sq ft, according to CBRE South Asia, a real estate consulting firm. According to CBRE’s report titled, ‘Fortifying India’s I&L landscape with a new manufacturing growth formula’, Pune showed the highest increase in warehousing and industrial space take-up by manufacturers, growing from 6% in 2019 to 13% in H1 2024. Delhi-NCR and Kolkata saw notable increases, reaching 18% and 12%, respectively, in H1 2024. Industry experts say the Government carried out regulatory reforms and improved the business environment, helping draw investments from global manufacturers such as Apple, Samsung, and Boeing in the manufacturing sector.
“Amidst evolving global geopolitical landscapes and economic challenges, India presents a compelling opportunity for growth. India’s manufacturing sector is on the cusp of a transformative journey, attracting significant interest on the global stage. This remarkable trajectory is driven by a combination of factors, including a stable investment environment, strategic government initiatives, and a thriving domestic market,” said Anshuman Magazine, chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE. “Continued economic development in both leading and emerging Asia Pacific markets will boost consumer demand for manufactured goods and further fuel the growth of the region’s manufacturing sector.” India’s engineering and manufacturing sector has seen a surge in warehouse leasing. The report showed that the sector’s share of total warehouse leasing grew from 8% in 2023 to 11% in H1 2024. The top sub-sectors driving warehouse leasing from 2019 to H1 2024 include domestic appliances, auto parts, and the automobile industry, reflecting robust demand across these key segments. “As demand for advanced infrastructure and scalable supply chain rises, the sector is set to play a crucial role in shaping India’s economic future, offering investors a chance to tap into this dynamic expansion,” said Madhusudhan G, CMD of Sumadhura Group. Sumadhura Logistics Parks is developing a 6 million sq. ft warehousing space in Karnataka. In the past few years, multinationals have begun exploring relocation of manufacturing outside China. They are buoyed by favorable government policies like the Gati Shakti National Master Plan and logistics-specific reforms like corporate tax cuts, the Goods and Services Tax (GST) and R&D tax benefits. Key policies such as the PLI schemes, “Make in India”, and the National Logistics Policy are further reinforcing India’s competitive edge.
“Strategic Government initiatives, a thriving domestic market and a young and skilled workforce, are all coming together to make India a global manufacturing leader. India’s focus on trade agreements holds immense potential for its manufacturing sector and will act as a trade catalyst. This presents a golden opportunity for India’s manufacturers to diversify from the dominance of the services sector and capture a larger share of the global manufacturing pie,” said Ram Chandnani, managing director, advisory & transactions services, CBRE India. Private consumption is also continuing to drive growth, with its share of GDP rising from 56.5% in FY2012 to 60.3% in FY24. Experts say economic growth in 2023 and a projected growth rate of 6.5-7% over 2024-2026 has spurred India’s emergence among the frontrunners in the global economic race. The manufacturing sector plays a key role, contributing 14% of GDP and employing over 27.3 million people. In June 2024, the Services PMI hit a 14-year high of 60.5, while manufacturing PMI stood at 58.3, reflecting expansion and the strongest growth in three-and-a-half years. The Index of Industrial Production (IIP) grew by 4.2% in June, pushing overall industrial growth to 5.8% in FY24.
