While investmentsin warehousing jumped 203 per cent in 2024, showing strong interest frominvestors in Grade A, sustainable, and tech-enabled facilities, landacquisition and a lack of trained manpower continue to remain challenges. IELis participating in the growth of the warehousing sector by buildingfuture-ready BTS spaces, says Ajay Gupta,Managing Director of IEL Ltd., in a tete-a-tete with EPC&I.
“Thesector is projected to grow at a CAGR of 10.3 per cent from 2025 to 2030,reaching USD 104.7-billion. This growth will boost real estate development inthe sector, with more companies focusing on building modern warehouses instrategic locations for better operational efficiency.”
“TierII and III cities such as Lucknow, Coimbatore, and Indore are emerging asstrong warehousing hubs. Lucknow, for example, has seen its warehousing stockgrow from 2.0 million sq. ft. in 2017 to 8.5 million sq. ft. in 2025, driven bygood connectivity, government policies, and industrial demand.”
How are Tier 2 and 3 cities reshaping thewarehousing ecosystem in India? And, what implications does this have forsupply chain strategies in retail and e-commerce?
Tier 2and 3 cities are becoming key warehousing hubs in India, accounting for around18.7 per cent of the total warehousing stock, which works out to roughly about100 million square feet. This growth supports a hub-and-spoke supply chainmodel, helping goods reach consumers faster.
With 63per cent of e-commerce orders now coming from these cities, businesses areinvesting in localised warehousing to improve last-mile delivery and reducelogistics costs. Cities like Lucknow, Indore, Coimbatore, and Jaipur aregaining attention due to better infrastructure, strategic location, and costbenefits. This shift decentralizes supply chains, enabling faster delivery innon-metro areas, and increasing efficiency in retail and e-commercedistribution.
With government initiatives like PM GatiShakti and Bharatmala driving infrastructure development, how are companiesleveraging these improvements to expand warehousing operations in underservedregions?
Governmentinitiatives, such as PM Gati Shakti, Bharatmala, and dedicated freightcorridors have made it easier to expand warehousing in less accessible areas. Theseinfrastructure improvements optimise distribution networks and reducetransportation time. As a result, companies are setting up warehouses in Tier 2and 3 cities where better connectivity now exists.
Thisshift certainly helps companies bring products closer to consumers and reducesdependence on metro cities. Improved road and freight connectivity alsosupports faster last-mile delivery and efficient inventory management. Playersare leveraging these policies to build and operate warehouses in emergingconsumption zones across the country.
What are the factors that are attractinglarge-scale investments in Grade-A warehousing facilities? And, how is thistrend expected to influence real estate developments in the sector by 2030?
Investmentsin Grade A warehousing are rising due to growing demand from e-commerce andorganised retail. Factors like lower land costs in Tier 2 and 3 cities, INR1.00–INR1.5-croreper acre, and rising demand for better storage facilities are driving thistrend.
Thesector is projected to grow at a CAGR of 10.3 per cent from 2025 to 2030,reaching USD 104.7-billion. This growth will boost real estate development inthe sector, with more companies focusing on building modern warehouses instrategic locations for better operational efficiency.
Given the surge in e-commerce demand fromnon-metro regions, how are businesses adapting their warehousing models toensure faster last-mile delivery and operational efficiency?
With 63per cent of e-commerce orders now coming from Tier 2 and 3 cities, businessesare adopting a hub-and-spoke warehousing model. This model helps placewarehouses closer to consumers in these regions, reducing delivery times andimproving efficiency. Cities like Lucknow are seeing rising demand due to theirlocation, infrastructure, and growing consumer base.
Companiesare also choosing areas with larger available land and access to skilled labourto run operations smoothly. These changes help businesses manage inventorybetter, reduce transportation costs, and deliver faster. This localised modelsupports the growth of both e-commerce and organised retail in non-metroregions.
Despite the rapid expansion, landacquisition and rising construction costs remain key challenges. What policy orregulatory reforms are needed to sustain growth in India’s warehousing sector?
Althoughthe warehousing sector is growing quickly, these issues are ongoing challenges.To maintain growth, regulatory processes need to be made simpler and faster. Reformscould include faster land approvals, clearer zoning laws, and smootherconstruction permissions. Continued investment in infrastructure, like roadsand freight corridors, will also support the sector.
Addressingthese issues will help businesses set up warehouses more efficiently,especially in Tier 2 and 3 cities. Streamlining policies will encourage moreinvestments and ensure the warehousing sector keeps up with the growing demandfrom the retail and e-commerce sectors across the country.
What is the market size?
India’swarehousing sector is seeing strong growth. In 2024, the country recordedapproximately 25.6 million sq. ft. of gross leasing. Grade A warehousing stockis expected to grow from 290 million sq. ft. in 2023 to 400 million sq. ft. by2027. Tier 2 and 3 cities have contributed nearly 100 million sq. ft., makingup about 18.7 per cent of the total warehousing stock.
Investmentsin the sector rose by 203 per cent in 2024, showing strong interest fromdomestic and global investors. This data reflects a growing demand driven bye-commerce, third-party logistics (3PL), and manufacturing sectors. We at IELLimited are aligning its growth strategy with this demand, especially byexpanding in Tier II and III cities to support decentralized supply chains.
What are the primary locations in thecountry for such warehouses for chemicals, dyes, etc?
Tier IIand III cities such as Lucknow, Coimbatore, and Indore are emerging as strongwarehousing hubs. Lucknow, for example, has seen its warehousing stock growfrom 2.0 million sq. ft. in 2017 to 8.5 million sq. ft. in 2025, driven by goodconnectivity, government policies, and industrial demand.
IEL isalso planning projects in these cities to serve various industries, includingspecialty sectors like chemicals and manufacturing. Key factors influencinglocation include connectivity to highways, access to industrial zones, andproximity to consumption centres.
How are warehousing facilities for(specialty) chemicals, dyes, pigments, etc., which are specifically differentfrom dry goods and consumer goods, being developed?
IEL’sapproach to modern warehousing includes built-to-suit (BTS) facilities that canbe customized for industry-specific needs. Clients can request specificfeatures, such as climate control, safety systems, and material handlingtechnology.
Theshift towards BTS facilities allows IEL to design and build warehouses thatmeet the precise storage conditions and compliance needs of sensitive productslike chemicals and pigments. These spaces are also tech-enabled and alignedwith global standards, ensuring safe and efficient operations for specialtyindustries.
What about availability of trainedmanpower in these areas?
One ofthe challenges identified in various reports is the lack of a skilled workforcein Tier II and III cities. With the warehousing sector becoming moretechnology-driven, there is a growing need for trained personnel to operatemodern equipment, digital tools, and automation systems.
IELconsiders local workforce availability when choosing locations and emphasizesthe importance of skill development to support long-term operations. Investingin training will be essential to meet the operational demands of modernwarehouses, especially for handling specialized storage and logisticsfunctions.
Going forward, what are the newtechnologies that would impact the warehousing of chemicals, dyes, pigments,etc.?
Whilechemical-specific examples are not mentioned, various reports highlight astrong trend toward integrating technology in modern warehousing. IEL usesWarehouse Management Systems (WMS), IoT for real-time monitoring, andautomation tools for efficient handling. Drones for inventory audits andpredictive maintenance are also being considered.
Thesetechnologies can significantly benefit the storage of sensitive goods likechemicals by ensuring safety, reducing errors, and enabling real-timevisibility. Tech-ready, plug-and-play warehouses are in demand, especiallyamong clients looking for efficient and secure storage operations.
What are the opportunities for growth inother markets?
Beyondmajor metros, Tier II and III cities like Lucknow, Coimbatore, and Indore offermajor opportunities. Affordable land, lower operating costs, and governmentpolicy support are attracting companies to these regions. IEL is activelyplanning projects in these cities to cater to rising demand anddecentralization of supply chains.
State-specificincentives, like Uttar Pradesh’s warehouse subsidy policy, and infrastructuresuch as expressways, are helping these markets grow. With the warehousing stockin these cities reaching 100 million sq. ft. in 2024, they representhigh-growth potential for new developments across sectors.
What is the current status on large-scaleinvestments and infrastructure facilities?
Investmentsin warehousing jumped 203 per cent in 2024, showing strong interest frominvestors in Grade A, sustainable, and tech-enabled facilities. IEL isparticipating in this growth by building future-ready BTS spaces, as Imentioned before. Infrastructure is improving, especially with governmentschemes like PM Gati Shakti and UIDF, helping with connectivity and reducingcosts.
However,land acquisition and a lack of trained manpower remain challenges. In areaslike Lucknow, road, rail, and airport access are strong, but some last-mileroads and power supply still need development. These gaps are being addressedgradually to support consistent warehousing operations.