India’s warehousing sector is undergoing a significant transformation, driven by rapid growth in e-commerce, expansion of organised retail, accelerating manufacturing activity and increased government emphasis on logistics infrastructure. Over time, warehouses have evolved in line with changing supply chain requirements and customer expectations. They are no longer limited to basic storage facilities, but represent a range of offerings supported by the integration of state-of-the-art technologies. Solutions such as warehouse management systems, robotics and internet of things-enabled devices are being used to improve operational efficiency. Automated storage and retrieval systems, conveyor systems, autonomous mobile robots and sortation technologies are also gaining traction, particularly in e-commerce and high-volume distribution environments.
Sustainability has emerged as a core operational and design element, with the increased adoption of green building practices and sustainable materials, energy-efficient lighting, rooftop solar installations, rainwater harvesting and waste management systems. Moreover, institutional investments have grown significantly, with interest and commitments from domestic and global investors, private equity funds and real estate investment trusts. At a recent India Infrastructure conference, key industry leaders highlighted emerging trends in the warehousing landscape, challenges, the growing role of sustainability and future focus areas. Key takeaways from the discussions…
Key trends shaping the warehousing space
Focus on customised offerings
The warehousing landscape is witnessing a focus on tailored warehousing solutions and the provision of customised solutions, particularly in physical designs and supply chain integration. This underscores the broader move towards customer-centric and solution-oriented warehousing models. Third-party logistics players are also prioritising meeting global standards and expectations from multinational companies. For example, the chemical sector is typically a high-compliance industry, requiring adherence to various standards and regulations, especially in the specialty chemical sector that sees the presence of multinational companies. Multiple audits are also carried out at regular intervals, both internally and by external consultants. Hence, it becomes critical to meet these global standards, and a strong understanding of the process delivery and compliance becomes vital.
Service providers are also partnering with clients to understand their expectations and deliver solutions that are customised to their requirements. This involves assessing expectations, identifying areas where the operational expertise can add value, and tailoring solutions accordingly.
Advancing quick commerce via distributed warehousing
The surge in dark stores was a key trend seen over the past few years, especially during the Covid-19 pandemic, to meet local demand. Post Covid 19, demand patterns and operating dynamics have changed.
While the concept of dark stores is expected to stay, players are focusing more on consolidation and becoming faster and closer to customers, in order to act as stronger feeders to the dark store network. Warehouses are being set up in connecting nodes to ensure that the network is distributed rather than located in very remote areas.
Moreover, slotted deliveries are making a comeback, with customers increasingly willing to accept deliveries in set time windows. Hybrid models are hence emerging, where dark stores are expected to continue operating alongside options for four-hour, six-hour and next-day deliveries.
Emerging business models
Many organisations are transitioning away from conventional warehousing models and exploring modern storage and logistics solutions. For instance, the Food Corporation of India (FCI) has proposed two pilot projects in Bengaluru and Chennai for the development of fully mechanised godowns equipped with palletised rack systems and forklift-based handling infrastructure. The adoption of bulk grain movement systems is also being
encouraged.
Client preference shifts towards longer lease periods
Warehouse providers are seeing a preference for long-term lease commitments from clients, in contrast to the typical five-year lease tenures seen earlier. Marquee clients and customers are increasingly prioritising securing fully compliant Grade A facilities that are strategically located.
This trend is being driven by the significant investments made by occupiers in material handling equipment, racking systems and automation infrastructure, which in many cases exceed the cost of the warehouse development itself. In addition, relocating warehousing operations involves considerable operational disruption and costs, often equivalent to several months of rental expenditure. As a result, clients are increasingly opting for longer lock-in periods to ensure operational continuity and maximise investment efficiency.
While the average lease tenure in the sector currently stands at around 10 years, certain occupiers have entered into agreements extending up to 30 years.
Charting a digital course with modern solutions
Automation and smart warehousing solutions are also being introduced across operations. These include forklift-integrated handling systems, digital warehouse grading platforms, enterprise resource planning-based management systems, automated gate operations, temperature monitoring technologies and automatic number plate recognition systems. The increasing adoption of such systems is also being driven by concerns regarding long-term labour availability, particularly in Mumbai and Delhi. In another recent initiative, FCI is collaborating with IIT Madras to explore the use of drones for fumigation and grain protection.
The Unified Logistics Interface Platform has notably enhanced the visibility of cargo movement, especially for end-users like importers and exporters. It has also helped reduce dwell time at inland container depots (ICDs), as importers receive advance notifications on container arrivals and can coordinate more efficiently with customers.
High-preference assets for warehouse developers
Built-to-suit (BTS) warehouses are generally considered the preferred model due to their longer lease tenures and lower re-leasing risks. These projects offer greater revenue visibility and operational stability. Companies with strong in-house engineering and development capabilities are increasingly positioning themselves as long-term BTS partners, especially in sectors such as automobiles and manufacturing.
Additionally, BTS projects often provide an additional strategic advantage by helping create integrated industrial ecosystems around anchor tenants.
Ideal assets for InvIT inclusion
Several factors are considered before a warehousing asset can be included within an infrastructure investment trust (InvIT). Strategically located warehousing assets are more likely to sustain long-term demand and occupancy levels, while also offering stronger re-leasing potential in the event of tenant exits. In this context, BTS assets like cold storage sometimes may not be considered suitable for InvIT platforms, as they pose relatively higher tenant replacement risks due to their customised nature, despite offering long-term lease stability. Meanwhile, warehouses in prime logistics corridors can generally be re-leased quickly.
The quality and compliance standards of the asset are other key considerations. Warehouses are expected to meet operational, safety and regulatory requirements, particularly in the case of Grade A facilities.
Tenant profile also plays an important role, with investors evaluating the financial strength, credit ratings and overall stability of occupiers. Long-term lease agreements further enhance the attractiveness of such assets by ensuring predictable revenue streams.
Yield potential and expectations
Concerns around yield stability remain limited, supported by strong tenant retention and sustained demand for high quality warehousing assets. As per industry experts, a portion of existing warehousing land banks could eventually become integrated into urban centres over the next decade, creating opportunities for alternative and higher-value land use. This is expected to further support asset value appreciation and long-term yield sustainability.
Ensuring sustainable warehouse operations
Sustainability, which was once regarded as a buzzword, has now evolved into a key business requirement. Sustainable practices are increasingly being adopted into warehousing solutions through initiatives such as using solar energy, adopting rainwater harvesting, ensuring the proper segregation of organic and inorganic waste, and replacing traditional lighting systems with LED lamps. Polycarbonate sheets are also being used to maximise natural light. Further, electric re-stackers are also being used in some ICDs, leading to savings on both the energy and cost fronts.
On the transportation side, electric vehicles (EVs) are gaining traction, especially for deliveries, supported by EV charging points. Liquefied natural gas trailers are also being deployed for logistics operations.
The transformation towards sustainability, however, requires time and significant investment. Hence, customers carry out close discussions to evaluate if measures being undertaken at the warehouses translate into measurable carbon footprint savings. Moreover, they are also evaluating warehouse developers more rigorously on environmental, social and governance (ESG), and compliance parameters, with requirements being driven by both Indian and global leadership. As a result, Indian operations contribute to reducing the overall carbon footprint on the global map.
Further, it has also been observed that initiatives in ESG, sustainability and green energy attract more customers. Hence, these initiatives that have supported business development are now aiding in customer acquisition.
Developers are now increasingly aligning their growth strategies with green building and energy efficiency goals. For instance, TVS has recently secured sustainability-linked financing from the International Finance Corporation, with a commitment to ensure that 40 per cent of its buildings achieve green certification standards. Several of its logistics parks have already received such certifications, reflecting the growing emphasis on sustainable infrastructure development.
Green certifications are becoming increasingly relevant as both multinational and domestic occupiers place greater importance on environmental performance, energy efficiency and long-term sustainability practices. Factors such as solar power integration, energy optimisation measures and progress towards net zero targets are now being actively evaluated by clients while selecting warehousing and industrial assets. Even though, certification alone may not be the sole differentiator, it serves as an important indicator of a developer’s commitment to sustainability and alignment with evolving industry standards and market expectations.
Requirements and constraints in energy storage infrastructure
A notable share of India’s energy consumption is met through hydrocarbons such as liquefied petroleum gas (LPG), petrol and other petroleum products. The country remains structurally short on crude oil and LPG, and hence relies heavily on imports prior to domestic refining and distribution. This creates the need for safe storage and handling across the entire value chain, especially between production and consumption, given the hazardous nature of these fuels. Regulations are therefore essential to ensure public safety and operational integrity for business continuity.
The complex operating environment and compliance and regulatory requirements pose various challenges. In this regard, the key challenge is the process of obtaining various approvals. Regular discussions are hence carried out with the government on streamlining processes while fully complying with the laws of the country.
Second, most cargo is imported, requiring storage terminals at ports. However, port land is limited and expensive, with pricing under long-term lease models being prohibitive and hence posing to be a constraint.
Moreover, unlike general warehouses, these terminals are highly cargo-specific, with no guaranteed customer utilisation commitments. Consequently, project de-risking continues to be an area of concern. While financing continues to be a challenge, mechanisms to address associated constraints exist. Strong conviction in the viability of the project is essential, with equity among the best options when the project is expected to have a successful outcome. Further, with the availability of project bankability, the company’s track record plays a critical role, even in the absence of guaranteed offtake. In some cases, the reinvestment of internal accruals has resulted in a strong equity-based financing structure.
Other key challenges
Certain challenges continue to loom, with land acquisition being the primary constraint. Public sector undertakings especially face difficulties in procuring land directly from private parties and rely on allocations from public sector entities. Collaborative models with private partners are hence being pursued to address this constraint.
Moreover, limitations in infrastructure and resources act as hindrances to fully leveraging opportunities.
While warehousing is generally considered a relatively green and low-impact industry, regulatory requirements such as environmental clearances can add several months to project development schedules. Stakeholders have emphasised the need for more streamlined and time-bound approval mechanisms, including stronger single-window clearance systems. This can significantly accelerate the development of warehouses and improve the pace of asset absorption.
Despite many digital advancements, challenges remain in reducing dependence on manual operations and chemical-based quality control practices. There is growing interest in exploring alternative technologies for mechanised handling in conventional godowns and more sustainable grain preservation techniques, including hermetic storage systems and advanced non-chemical treatment methods. Such innovations could help minimise pesticide usage while improving storage efficiency and grain quality management over the long term.
Key emerging hotspots
India’s long-term growth is increasingly being driven by a holistic development approach. Rising manufacturing activity, the rapid growth of e-commerce and significant improvements in roads, railways and airports have enabled expansion into previously underserved locations. As connectivity improves, many emerging regions are evolving into important industrial and logistics hubs rather than remaining conventional Tier II markets. While some established clusters are witnessing saturation, demand and competition are steadily expanding into newer geographies.
This trend is visible in industrial centres such as Pithampur, where development has progressed beyond the initial six sectors into newer areas such as Sector 7, despite land acquisition challenges.
While governments across states are increasingly recognising the importance of logistics and introducing dedicated warehousing and logistics policies, there remains a need for more proactive and integrated planning. In the case of manufacturing and industrial parks, proximity to major urban centres continues to play an important role, particularly due to the need for skilled talent, supply chain connectivity and supporting infrastructure. For instance, in Uttar Pradesh, established hubs such as Greater Noida continue to attract greater industrial activity, while cities such as Lucknow and other emerging centres are gradually gaining traction.
Growth potential and future outlook
Going forward, identifying areas that require warehouse development is essential to tap emerging demands. Ongoing knowledge sharing between developers and stakeholders is key to mapping such requirements and ensuring that they are met.
Safety, compliance with ESG norms, the integration of technology, and Grade A warehouses are expected to remain key priority areas in the coming years as well. At the same time, efforts are likely to be seen towards raising utilisation rates, expanding into Tier II cities and developing larger warehousing spaces.
Expanding land banks remains a strategic priority, as a larger footprint enables greater scalability and strengthens the long-term value proposition of logistics and investment platforms. Retrofitting and upgrading existing assets would also remain an important area of focus to improve operational efficiency and asset quality.
There is growing emphasis on automation and smart supply chain solutions, particularly in large-scale public sector foodgrain operations. With foodgrain inventories valued at nearly Rs 3 trillion and logistics operations involving the movement of millions of tonnes annually through trucks and railway rakes, incremental efficiency improvements can generate significant operational benefits.
Future priorities include focus on expanding the geographic footprint and strengthening presence in markets that are likely to drive the next phase of economic and industrial growth in the country. At the same time, maintaining high customer satisfaction and operational stability continues to be a key objective. Sustained occupancy levels of nearly 99 per cent are being viewed as critical indicators of strong asset performance, long-term tenant relationships and efficient portfolio management. Stakeholders are also looking to scale operations in emerging logistics and consumption hubs to capitalise on evolving demand patterns.
