India's industrial and logistics sector recorded absorption of 34.8 million square feet in the first half of 2026, marking a 2.4 per cent year-on-year growth, according to a report released on Thursday, 2 July 2026 by Savills India. The numbers signal sustained momentum in one of the country's fastest-growing real estate segments, underpinned by broad-based demand across manufacturing, logistics, and consumer goods.

Demand Drivers

Manufacturing occupiers led absorption at 30 per cent of total demand, followed by third-party logistics (3PL) players at 23 per cent. FMCG and FMCD segments collectively accounted for 18 per cent, while e-commerce contributed 10 per cent — indicating that growth is not concentrated in a single sector but is spread across key verticals of the modern supply chain.

City-Wise Absorption

Tier 1 cities continued to dominate, accounting for 78 per cent of total absorption. Delhi-NCR remained the single largest contributor at nearly 20 per cent, followed by Pune at 17 per cent and Mumbai at 16 per cent. Tier 2 and Tier 3 markets contributed the remaining 22 per cent, suggesting that industrial real estate demand is beginning to decentralise, even if slowly.

Fresh Supply and Grade-A Shift

The market saw fresh supply of 42.7 million sq ft in H1 2026, of which Tier 1 cities accounted for 36.7 million sq ft or 86 per cent. Tier 2 and Tier 3 cities added 6 million sq ft, or 14 per cent of total new supply. Notably, the preference for quality space has intensified — Grade-A absorption rose to 59 per cent in H1 2026, up from 55 per cent in H1 2025, driven by greater focus on compliance, operational quality, and evolving ESG requirements.

Industry Perspective

Srinivas N, Managing Director, Industrial and Logistics, Savills India, said India's manufacturing ecosystem is rapidly evolving into a globally integrated 'Made for India and the World' platform. '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,' he said. He added that proactive trade agreements and rising investments are further reinforcing this shift.

What to Watch

With supply outpacing absorption — 42.7 million sq ft delivered against 34.8 million sq ft absorbed — vacancy management in Tier 1 markets will be a key metric in the second half of 2026. The continued rise of Grade-A demand, combined with expanding Tier 2 and Tier 3 activity, is expected to shape the sector's trajectory through the rest of the year.