India’s logistics landscape is undergoing a structural transformation with implications far beyond the real estate sector. The country’s warehousing market recorded a 42 percent year-on-year (YoY) surge in leasing activity to 32.1 million sq ft in the first half of 2025, according to new data from Knight Frank India. While this growth is a headline for property analysts, its real significance lies in how it strengthens the backbone of India’s supply chains — and, by extension, its capacity to accelerate time-critical freight flows through the air cargo sector.
The latest figures point to more than a cyclical rebound. They suggest that India’s industrial and logistics hubs are entering a phase of coordinated expansion, driven by manufacturing growth, technology-enabled Grade A facilities, and the clustering of high-value industries around key airport gateways. Together, these trends are reshaping how air cargo operators can design, optimise, and scale their networks.
Manufacturing at the Core of Demand
At the heart of the surge is the manufacturing sector’s absorption of 14.6 million sq ft of space, a 71 percent YoY rise, accounting for 45 percent of total transactions in H1 2025. The primary growth drivers — energy, automotive, chemicals, and heavy engineering — mirror the high-complexity, high-value cargo types that are often most dependent on airfreight due to their speed-to-market requirements.
This shift is consistent with broader global supply chain realignments. As manufacturers diversify away from China, India is emerging as a preferred base for export-oriented production. For the air cargo industry, these manufacturing clusters represent not only a larger volume of potential shipments but also a demand profile that prioritises reliability, compliance, and rapid transit — areas where integrated warehouse–airport ecosystems can deliver a competitive advantage.
Gateway Cities Consolidate their Role
Mumbai, Pune, and Chennai have emerged as the leading markets. Mumbai leased 7.5 million sq ft in H1 2025, a 63 percent YoY increase, driven partly by its proximity to Chhatrapati Shivaji Maharaj International Airport — a leading hub for pharmaceuticals, perishables, and express cargo. Pune followed with 5.2 million sq ft (+76 percent), underpinned by automotive and industrial exports, while Chennai posted the fastest growth at 4.1 million sq ft (+135 percent), aligned with its role as an electronics and automotive export gateway.
For air cargo, the proximity of new Grade A warehousing to these airports reduces first-mile trucking times, improves cut-off compliance for exports, and facilitates same-day connectivity to global networks. It also aligns with the National Logistics Policy’s objective of promoting multimodal hubs that integrate road, rail, and air capacity.
The rise of grade A and automation-ready facilities
The report notes that 63 percent of transactions in H1 2025 were for Grade A spaces, up from 54 percent a year earlier, with 75 percent of new supply also meeting this standard. These facilities — offering higher throughput efficiency, automation readiness, and better compliance with environmental and safety standards — are inherently better suited to airfreight handling.
For time-sensitive shipments such as pharmaceuticals, electronics, and FMCG, Grade A facilities not only ensure compliance with international handling protocols but also enable faster cargo build-up and customs clearance. As ESG requirements tighten globally, their energy efficiency and sustainable design will also help air cargo operators align with ICAO’s CORSIA targets and EU sustainability reporting standards.
3PL and e-commerce synergies
Third-party logistics (3PL) providers leased 8.7 million sq ft in H1 2025, representing a 27 percent share of total demand and a 30 percent YoY increase. E-commerce leasing rose 61 percent YoY to 3.3 million sq ft, marking a strong rebound in omni-channel distribution models that integrate air and ground networks.
Notably, Mumbai accounted for 35 percent of all 3PL leasing, consolidating its role as a central node for nationwide fulfilment. For air cargo, this points to greater demand for express and small-parcel capacity, as 3PL operators increasingly integrate airfreight into their same-day and next-day service offerings.
Tightening Vacancy and Rising Rents
The pan-India vacancy rate fell to 12.1 percent from 13.1 percent a year earlier, while rents increased across all major markets — Mumbai (+4.7 percent), Kolkata (+4.6 percent), Pune (+3.8 percent) — reflecting supply constraints in high-demand clusters. For cargo operators, rising rents in airport-adjacent areas could prompt exploration of long-term leasing partnerships, joint development of bonded facilities, or public–private collaboration on airport city projects to secure operational bases.
Policy Alignment and Trade Facilitation
This warehousing expansion is occurring alongside policy measures that reinforce India’s trade facilitation capacity. Production Linked Incentive (PLI) schemes, infrastructure investment under the National Logistics Policy (NLP), and customs modernisation are aligning to create a more integrated export–import environment.
As Shishir Baijal, Chairman & Managing Director at Knight Frank India, observed:
“The healthy surge in volumes reflects India’s expanding manufacturing and consumption base. With supply trailing demand and vacancy at a low 12.1 percent, the sector is poised for another breakout phase.”
For the air cargo industry, this alignment offers a window to integrate bonded handling areas, temperature-controlled storage, and dedicated ULD build-up zones directly within major logistics parks, reducing transit risk and improving cut-off compliance.
The Strategic Air Cargo Opportunity
India’s industrial and warehousing stock has now surpassed 500 million sq ft, with export-oriented clusters forming in proximity to key airports. The combination of high-value manufacturing, Grade A facilities, and supportive policy makes a strong case for integrating air cargo infrastructure within these hubs.
Potential steps include:
Co-location models: Establishing bonded airfreight facilities in logistics parks to streamline export processes.
Cold chain expansion: Leveraging warehouse–airport proximity to strengthen pharma and perishables supply chains.
Digital integration: Deploying unified cargo community systems that connect warehouse management with airport cargo terminals in real time.
Policy Takeaways for Air Cargo Stakeholders
Warehouse–airport integration as a competitive lever
Integrating cargo facilities within emerging logistics hubs can reduce first-mile transit times and improve SLA compliance for exports.
