India’s Industrial & Logistics Leasing Rises 2.4% to 34.8 Million Sq Ft in H1 2026: Savills India

India’s industrial and logistics (I&L) real estate sector continued its steady growth momentum during the first half of 2026, with gross absorption reaching 34.8 million square feet, marking a 2.4% year-on-year increase, according to the latest report released by Savills India. The sustained leasing activity highlights the resilience of the country’s manufacturing ecosystem and the growing demand for modern warehousing and logistics infrastructure.

Manufacturing companies remained the largest occupier segment, accounting for 30% of the total leasing activity during H1 2026. Third-party logistics (3PL) companies followed with a 23% share, while fast-moving consumer goods (FMCG) and fast-moving consumer durables (FMCD) contributed 18%. E-commerce companies accounted for another 10%, reflecting continued expansion across India’s supply chain and distribution network.

Tier-I cities continued to dominate the industrial and logistics market, contributing 27.3 million square feet, or 78% of total absorption, representing a 4.2% increase over the corresponding period last year. Meanwhile, Tier-II and Tier-III cities accounted for 7.5 million square feet of leasing activity, although these markets witnessed a marginal decline of 3.8% year-on-year.

On the supply side, developers delivered 42.7 million square feet of new industrial and warehousing space during the first six months of 2026, a significant 27.8% increase compared to H1 2025. Tier-I cities accounted for nearly 86% of the new supply, underlining the continued preference for established industrial hubs.

The report also highlighted a growing shift towards premium industrial assets. Grade-A developments accounted for 59% of total leasing during H1 2026, up from 55% a year earlier. Businesses are increasingly prioritising high-quality facilities that offer better operational efficiency, sustainability features, regulatory compliance and modern infrastructure.

Among individual markets, Delhi-NCR emerged as the country’s largest industrial leasing destination with 6.8 million square feet of absorption, followed by Pune with 6.1 million square feet and Mumbai with 5.5 million square feet. Bengaluru, Chennai and Ahmedabad also witnessed healthy leasing activity, supported by strong manufacturing and logistics demand.

According to Savills India, India’s manufacturing sector is evolving into a globally integrated production hub, supported by trade agreements, increasing investments and supply chain diversification. The consultancy expects demand from manufacturing, 3PL, FMCG, retail and e-commerce companies to remain strong over the coming quarters.

Although supply currently exceeds demand in some markets, rental values for compliant Grade-A industrial assets are expected to witness gradual appreciation due to rising land prices and construction costs. Stable investment yields and growing institutional interest are also expected to support long-term growth in India’s industrial and logistics real estate sector, making it one of the country’s strongest-performing commercial asset classes.