India’s industrial and logistics sector continued its strong post-pandemic growth trajectory in 2025, recording its highest-ever annual absorption of 76.5 million square feet, marking an 18.6 per cent year-on-year increase, a report showed on Wednesday. 

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, according to data released by international real estate advisory firm Savills India.

This is followed by sustained demand from third-party logistics (3PL) segment with a 28 per cent overall contribution, FMCG and 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,” said Srinivas N, Managing Director, Industrial and Logistics, Savills India.

Tier 1 cities accounted for 78 per cent of total absorption, while tier 2 and 3 cities took the remaining 22 per cent. On the supply side, tier 1 cities accounted for 82 per cent of the total supply, while tier 2 and 3 cities contributed 18 per cent, said the report.

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 industrial and logistics sector is set for a breakout year in 2026, with both supply and absorption expected to comfortably surpass 80 million sq. ft., 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, said the report.