India’s industrial and logistics sector maintained steady growth during the first half of 2026, with gross absorption reaching 34.8 million sq. ft., up 2.4% year-on-year, according to international real estate advisory firm Savills India.
The market continued to benefit from broad-based demand, led by the manufacturing sector, which accounted for 30% of total absorption. Third-party logistics (3PL) companies followed with a 23% share, while FMCG and FMCD occupiers contributed 18%, and e-commerce accounted for 10% of leasing activity.
Tier-I cities retain dominance
Tier-I cities remained the primary growth centres, contributing 78% of total absorption during H1 2026, while Tier-II and Tier-III markets accounted for the remaining 22%, reflecting rising demand beyond the country’s major metropolitan hubs.
Among individual markets, Delhi-NCR emerged as the largest contributor with a 20% share of total absorption, followed by Pune at 17% and Mumbai at 16%.
Supply remains ahead of demand
The sector witnessed fresh supply of 42.7 million sq. ft. during the first half of the year. Tier-I cities accounted for 36.7 million sq. ft., representing 86% of total new supply, while Tier-II and Tier-III markets contributed 6 million sq. ft. or 14%.
Delhi-NCR also led new project completions with a 20% share of total supply, followed by Mumbai and Chennai, each contributing 17%.
Manufacturing shift strengthens outlook
Savills India Managing Director, Industrial and Logistics, Srinivas N, said, “India’s manufacturing ecosystem is rapidly evolving into a globally integrated ‘Made for India and the World’ platform. Supported by proactive trade agreements and rising investments, this shift is driving strong demand for industrial and logistics real estate. As supply chains diversify and manufacturing expands, growth will be led by scale and new industrial clusters, creating long-term opportunities and strengthening India’s position in global value chains.”
E-commerce and quick commerce gain momentum
Savills India said demand from e-commerce continues to increase, particularly in Tier-II and Tier-III cities, supported by improving last-mile connectivity and expanding delivery networks.
The report noted that the rapid growth of the quick commerce segment is driving demand for dark stores, fuelled by faster delivery expectations, urbanisation, organised retail expansion and time-sensitive logistics requirements.
Outlook remains positive
Savills India expects the industrial and logistics sector to maintain stable, demand-led growth through the rest of 2026, supported by manufacturing expansion, resilient domestic consumption and ongoing supply chain realignment.
The consultancy said rental values for compliant Grade-A industrial and logistics assets are expected to witness a mild upward trend, aided by rising land and construction costs. While new supply is currently outpacing demand, resulting in elevated vacancy levels in the near term, yields are expected to remain stable, reinforcing the sector’s appeal among both domestic and global investors.
The report added that continued policy support, infrastructure development and growing interest from occupiers are expected to keep industrial and logistics real estate among India’s most resilient commercial asset classes in 2026.