India’s industrial real estate sector is undergoing a remarkable transformation driven by substantial investments, strategic government initiatives and a global shift in manufacturing dynamics. In 2024, institutional investments in Indian real estate surged to USD 6.5 billion, marking a 22% increase from the previous year. The industrial and warehousing segment emerged as the top contributor, attracting USD 2.5 billion in investments—a staggering 190% jump compared to 2023. This sector accounted for 39% of total inflows, surpassing the office segment, which garnered USD 2.3 billion.
Government Initiatives Driving Growth
The government’s Production-Linked Incentive (PLI) scheme has been a key catalyst in this growth. Launched in 2020, the PLI scheme offers financial incentives to manufacturers in critical sectors such as electronics, pharmaceuticals, and textiles. To date, the scheme has attracted over USD 17 billion in investments across 14 sectors, leading to the establishment of more than 1,300 manufacturing units nationwide. States like Gujarat, Tamil Nadu, and Karnataka have emerged as major beneficiaries, collectively accounting for approximately 72% of the total PLI capital expenditure. Gujarat alone is set to attract investments exceeding INR 36,000 crore, solidifying its position as a cornerstone of India’s industrial resurgence.
Global Shifts and Strategic Investments
The “China Plus One” strategy, where companies diversify their manufacturing operations beyond China, has further bolstered India’s appeal as a global manufacturing destination. States like Tamil Nadu have become hotspots for global giants such as Foxconn, Samsung, and Hyundai, drawn by robust infrastructure and a skilled workforce. This influx has spurred a surge in demand for industrial parks and logistics facilities.
IndoSpace, a leading warehouse developer, has announced plans to increase its investment in Tamil Nadu by 41% over the next three years, raising its commitment from USD 380 million to USD 536 million. This expansion is expected to create over 8,000 new jobs and cater to the growing demand for industrial spaces as more companies establish operations in India. Similarly, Gujarat has attracted significant investments in the chemical and textile sectors, with companies setting up large manufacturing plants in industrial hubs like Dahej and Sanand. Karnataka’s aerospace and defense sectors have also seen substantial growth, with global players establishing production facilities in the state’s industrial corridors.
Logistics and Infrastructure Development
The expansion of logistics parks is a critical component of India’s industrial boom. Developers like IndoSpace, Blackstone’s Horizon Industrial Parks, and ESR Group’s joint venture with GIC are investing heavily in state-of-the-art logistics facilities. For instance, IndoSpace plans to invest INR 4,500 crore in new industrial and logistics parks in Tamil Nadu, while ESR Group’s USD 750 million joint venture aims to enhance supply chain efficiency across India.
In Maharashtra, the Aurangabad Industrial City (AURIC)—India’s first greenfield industrial smart city—represents a landmark development. Spread over 10,000 acres, AURIC is part of the Delhi-Mumbai Industrial Corridor Project and focuses on sectors such as textiles, food, defense, engineering, and electronics. With 60% of its land designated for industrial use and the remaining 40% for residential and commercial purposes, AURIC exemplifies India’s commitment to creating world-class industrial infrastructure.
Gujarat’s Dholera Special Investment Region (SIR) is another significant development, poised to attract both national and international investments. The region is set to kickstart its plug-and-play infrastructure, with companies like Tata establishing India’s first chip fabrication unit in Dholera, highlighting the area’s potential in the semiconductor industry.
A Shift from Traditional Real Estate
The industrial real estate boom marks a departure from traditional real estate sectors such as residential and commercial properties. Unlike the cyclical nature of residential markets, industrial real estate is witnessing sustained demand driven by structural changes in the global manufacturing landscape and supportive government policies. The focus is now on creating specialized infrastructure that caters to the specific needs of industries, including large floor spaces, high load-bearing capacities, and advanced technological integrations for automation and efficient operations.
The development of Multi-Modal Logistics Parks (MMLPs) under the government’s Logistics Efficiency Enhancement Program exemplifies this shift. These parks aim to lower freight costs and improve supply chain efficiency by integrating various modes of transport and advanced storage solutions.
Conclusion
India’s industrial real estate sector is at the forefront of the nation’s transformation into a global manufacturing powerhouse. The confluence of favorable government policies, strategic global shifts in manufacturing, and proactive infrastructure development has created a conducive environment for industrial growth. As multinational corporations continue to establish and expand their operations in India, the demand for sophisticated industrial spaces and logistics facilities is expected to remain robust.
This boom not only underscores India’s potential as a global manufacturing hub but also highlights the critical role of industrial real estate in driving economic growth, job creation, and sustainable development. With continued investments and strategic initiatives, India is well on its way to cementing its position in the global manufacturing arena.
