Industrial & Logistics Sector records 18.6 per cent growth in Y-o-Y absorption: Savills India

New Delhi, December 27, 2025: India’s Industrial & Logistics (I&L) sector continued its strong post-pandemic growth trajectory in 2025, recording its highest-ever annual absorption of 76.5 million square feet (msf), marking an 18.6 per cent year-on-year increase, according to data released by international real estate advisory firm Savills India.

Backed by proactive government policies, the manufacturing segment has continued to be the strongest demand driver, accounting for 22 million sq. ft. (29 per cent) of total absorption in 2025, up from 22 per cent in 2024. This is followed by sustained demand from 3PL segment with a 28 per cent overall contribution, FMCG & FMCD with 11 per cent and retail with 6 per cent. The E-Commerce sector has rebounded after years of reduced activity, with its contribution rising from 4 per cent in 2023 to 12 per cent in 2025.

“India’s manufacturing landscape is experiencing a fundamental transformation, propelled by the sustained momentum of the “Make In India” initiative, which has evolved into a globally integrated “Made By India” manufacturing platform. This evolution signals both the strengthening of domestic production capabilities and India’s expanding role within global supply chains. Industrial and logistics real estate remains robust, with absorption crossing 76+ msf in 2025, with the manufacturing sector as long-term demand driver. Future growth will be shaped as much by geographic expansion as by scale, with activity spreading across over 20 Tier I and II cities and a growing industrial ecosystem emerging in more than 25 Tier II and III markets. This dispersion is redefining India’s industrial geography, enhancing regional supply chain resilience, and creating enduring opportunities for occupiers, developers, and long-term capital,” said Srinivas N, Managing Director, Industrial and Logistics, Savills India.

Tier-I cities accounted for 78 per cent of total absorption, while Tier-II & III cities took the remaining 22 per cent. On the supply side, Tier-I cities accounted for 82 per cent of the total supply, while Tier-II & III cities contributed 18 per cent, according to International real estate advisory firm, Savills India.

The demand for Grade-A space has seen a substantial surge in recent years, due to the growing emphasis on quality and compliance, as well as changing occupier preferences to meet ESG standards as a result the overall Grade-A supply increased to 58 per cent in 2025 from 55 per cent in 2024.

Delhi-NCR remained at the top with the highest contribution of 17 per cent to total absorption, followed by Pune and Mumbai with 15 per cent and 14 per cent respectively. The Tier-II & III cities together accounted for 22 per cent of the total absorption. In terms of supply, Delhi-NCR accounted for the highest contribution of 17 per cent in 2025, followed by Mumbai at 16 per cent, and Pune at 14 per cent while the Tier-II & III cities together accounted for 18 per cent of the total supply.

Outlook for 2026

The industrial and logistics sector is set for a breakout year in 2026, with both supply and absorption expected to comfortably surpass 80 msf, underscoring the sector’s deepening structural demand. Manufacturing, 3PL, and FMCG/FMCD occupiers will remain the primary growth engines, driven by supply-chain diversification, rising consumption, and expansion of organised logistics. Yields are likely to remain stable, reinforcing the sector’s attractiveness for both domestic and global investors and positioning industrial and logistics real estate as one of the most resilient and scalable asset classes in 2026.