India’s industrial and logistics sector sustained its strong post-pandemic momentum in 2025, recording its highest-ever annual absorption of 76.5 million square feet, a year-on-year growth of 18.6 per cent, according to a report released on Wednesday by real estate advisory firm Savills India.
The surge was led by manufacturing, which emerged as the largest demand driver, accounting for 22 million sq. ft., or 29 per cent of total absorption during the year. This marks a sharp increase from its 22 per cent share in 2024, reflecting the impact of government-led initiatives aimed at strengthening domestic production and integrating India more deeply into global supply chains.
Third-party logistics (3PL) players continued to show robust demand, contributing 28 per cent of overall absorption. This was followed by FMCG and FMCD companies with an 11 per cent share, while the retail segment accounted for 6 per cent. The e-commerce sector staged a notable comeback after several years of muted activity, with its share rising to 12 per cent in 2025 from just 4 per cent in 2023.
“India’s manufacturing landscape is undergoing a fundamental transformation, driven by the sustained momentum of the ‘Make in India’ initiative, which has now evolved into a globally integrated ‘Made by India’ manufacturing platform,” said Srinivas N, Managing Director – Industrial and Logistics, Savills India. He added that this shift underscores both the strengthening of domestic manufacturing capabilities and India’s expanding role in global supply chains.
Tier 1 cities continued to dominate the market, accounting for 78 per cent of total absorption, while tier 2 and 3 cities together contributed the remaining 22 per cent. On the supply side, tier 1 cities made up 82 per cent of new additions, with tier 2 and 3 cities accounting for 18 per cent, indicating a gradual but steady broadening of the industrial and logistics footprint beyond major metros.
Among individual markets, Delhi-NCR led the chart with a 17 per cent share of total absorption, followed by Pune at 15 per cent and Mumbai at 14 per cent, reaffirming their status as key industrial and logistics hubs.
Looking ahead, the sector is poised for a breakout year in 2026, with both supply and absorption expected to cross the 80 million sq. ft. mark. Savills said manufacturing, 3PL, and FMCG/FMCD occupiers will remain the primary growth engines, supported by supply-chain diversification strategies, rising domestic consumption, and the continued expansion of organised logistics across the country.
