The logistics sector in India has witnessed a steady expansion of warehousing and storage infrastructure serving the agriculture and industrial sectors. In recent times, agricultural warehousing infrastructure has matured and witnessed significant developments towards the establishment of silo storage and cold chains. Meanwhile, the growth of industrial warehousing is being driven by the rise of mega centres, omni-channel retailing and increased interest from private equity investors. Similarly, the growing export-import (EXIM) trade in India has pumped the demand for a strong container market with container freight stations (CFSs). The government is also promoting the establishment of multi-modal logistics parks to enhance supply chain efficiency. The Ministry of Road Transport and Highways (MoRTH), the National Highways Authority of India (NHAI) and Container Corporation of India (CONCOR) have undertaken major works to set up the relevant infrastructure.
Growth in agricultural warehousing and silo storage infrastructure
The agricultural warehousing infrastructure has grown over the years to stand at a current total covered storage capacity of around 90 million metric tonnes (mmt). The Food Corporation of India (FCI) has played a central role in setting up this infrastructure. It owns and hires a total capacity of around 45 per cent (as of November 2024).
Besides, state agencies, along with state warehousing corporations contribute around 41 per cent share of the total capacity, while about 14 per cent is facilitated by the Central Warehousing Corporation. The growth of the logistics sector over the next few years seems highly promising, driven by a continued rise in demand, significant investments and strategic policy initiatives. As a result, agriculture warehousing will experience a boost and its capacity is projected to reach 356 mmt by 2028-29 at a historical compound annual growth rate (CAGR) of around 10 per cent, according to India Infrastructure Research.
Furthermore, silo storage (especially for wheat) has gained prominence beyond traditional warehouse storage, due to its numerous advantages such as lower operating costs, reduced grain losses and minimal land requirements. So far, around 2 mmt of silo storage capacity has been completed, of which 82.5 per cent is operational. Significant contributions come from states such as Punjab and Madhya Pradesh, which account for nearly 56 per cent of the operationalised capacity. The expansion of silo storage has been supported by recent initiatives by the FCI such as the setting up of six new silos under the public-private partnership mode. Its target of developing a total capacity of around 11 million mt in 250 locations under the hub and spoke model will be an additional push. As a result, silo storage is expected to expand tenfold in another five to six years.
Expansion of advanced industrial warehouses
The proliferation of industrial warehousing is dominated by the demand for Grade A warehousing. It has seen rapid growth, with its capacity expanding from 66 million square feet in 2018 to 187 million square feet in 2023. This growth has surpassed Grade B warehousing capacity, with an increasing preference for Grade A spaces, driven by modern compliance standards, superior quality and efficiency. This has also led to a consistent decline in vacancy rates, which dropped from 7 per cent in 2022 to 5 per cent in 2023. The demand is further fuelled by sectors such as manufacturing, 3PL, e-commerce expansion in Tier II and III cities, and the rise of quick commerce.
In the first half of 2024, the 3PL segment accounted for 38 per cent of the gross absorption, followed by the auto and engineering segment at 23 per cent. Over the years, this sector has also witnessed a surge in investments, particularly in the first half of 2024, highlighting the increasing interest in industrial warehousing as a lucrative asset class. Going forward, the overall industrial warehouse stock in India is projected to grow at a CAGR of 12 per cent, reaching around 600 million square feet by 2027, driven by the rising demand for Grade A warehousing spaces.
Impetus to cold chain storage
India is proud of a steadily expanding cold storage infrastructure that supports the growth of agriculture and pharmaceutical logistics. This translates to 8,698 cold storage units, with a total capacity of 39.6 mmt as of August 2024. The cold chain storage segment dominates the market, holding a 70 per cent share over the transportation segment. Geographically, Uttar Pradesh leads with the largest share of cold storage capacity at 38 per cent, followed by West Bengal (15 per cent) and Gujarat (10 per cent).
In the cold chain transportation segment, the movement of goods in a temperature-controlled environment relies heavily on refrigerated containers, that is, reefers, which require specialised infrastructure at the handling terminals. Key terminals such as APM Terminals in Apapa and Mumbai are equipped with more than 1,500 reefer plugs; however, the development of reefer infrastructure remains insufficient to meet the growing demand.
According to India Infrastructure Research, this demand is expected to be met by the projected growth in cold storage capacity from 32 mmt in 2014 to 45 mmt by 2029. The growth in the capacity will be further facilitated by the government’s ongoing work on around 400 cold chain projects worth Rs 117 billion.
Boost to CFSs and ICDs
India houses around 168 CFSs and 129 inland container depots (ICDs) that manage containerised cargo and facilitate smooth trade flows, as of November 2024. Several recent developments have also supported the establishment of such infrastructure. For instance, Bihar’s first dry port and ICD at Bihta was inaugurated in October 2024, enhancing connectivity and trade efficiency in the region. Similarly, the operationalisation of CONCOR’s ICD at Sambre railway station in Belagavi in September 2024 has further strengthened India’s inland container network. Another significant development in this domain was the introduction of the Port Link Express by CONCOR in August 2024, aimed at boosting EXIM trade through the Kolkata CFS.
Enhancement of MMLPs
In recent times, MoRTH and NHAI have taken significant steps to set up multimodal logistics parks (MMLPs) recognising their importance in optimising logistics operations. Over 15 MMLPs have already been developed by CONCOR, with others at various stages of development. Additionally, as of August 2024, MoRTH has awarded six MMLPs, with three more currently under bidding.
One of the most significant projects is the first MMLP in Jogighopa, Assam, which is poised to enhance cross-border trade with Bangladesh, Bhutan and Nepal, when it becomes operational in 2025. Additionally, the revival of the MMLP project at Mappedu in Chennai, awarded to Reliance Industries for Rs 14.12 billion, underscores the strategic importance of these parks in key regions. Further, the MMLP at Mappedu is set to serve as a major logistics hub in Southern India, driving regional trade and enhancing operational efficiency.
As the sector grows, PM Gati Shakti initiative will further promote their development to enhance logistics operations, as it plans to develop 35 MMLPs in the future.
Burgeoning container market
The container market in India has shown robust growth, driven by factors such as increased trade activity (both domestic and international), supportive policy measures and expanding supply chain infrastructure. The container traffic at the Indian ports has demonstrated significant growth, with around 35 per cent increase in container throughput during the first half of financial year 2025, compared to the first half of financial year 2024.
Overall, Indian ports handled around 14 million TEUs in 2024, marking a continuation of the sector’s expansion, with an annual growth rate of around 6 per cent over the past five years. Besides, the rail container segment also experienced positive growth, with around 7 per cent increase in traffic, totalling 85 million tonnes in 2023-24. This growth was supported by partial connectivity of the dedicated freight corridor with key ports such as Mundra and Pipavav. Some of the key initiatives such as CONCOR’s investment of Rs 6.1 billion in 2024-25 for terminal development, container procurement and IT infrastructure are also focused on increasing container logistics capacity.
Moving forward
The government’s keen interest in delimiting the growth of the logistics sector demands attention on a few critical infrastructural aspects in the future. The expansion of essential components such as reefer transport and associated facilities will be crucial to unlocking the full potential of the cold chain segment, in turn, strengthening the agricultural warehousing. A focus on creating advanced Grade A warehouses must be accompanied by addressal of the associated hurdles of land acquisition and regulatory approvals, which tend to delay projects and affect rental dynamics. Further, as the Indian container manufacturing ecosystem is in its infancy, there is a growing opportunity to enhance domestic manufacturing capabilities under government schemes such as the Production-Linked Incentive Scheme.
