India’s manufacturing sector is rapidly transforming the country’s industrial & logistics real estate landscape, with leasing demand projected to surge to nearly 34 million sq. ft by 2027, according to JLL’s latest report, “From Make in India to Made by India: Advanced Manufacturing Real Estate Lifecycle.”
Manufacturing Leasing Soars Seven-Fold Since 2020
Light manufacturing leasing across the top 8 Indian cities has seen explosive growth — from 3.2 million sq. ft in 2020 to 22.1 million sq. ft in 2024, marking a 62% CAGR.
Year-end 2025 absorption is expected to reach 25.4 million sq. ft, up 15% from 2024.
By 2027, manufacturing alone is estimated to account for 46% of India’s total industrial and warehousing absorption, underscoring the sector’s dominance.
Shift to Grade A Facilities Driven by Modern Manufacturing Needs
Grade A properties are emerging as the clear preference for manufacturers.
Share of Grade A leasing grew from:
- 70% in 2019
- 82% in 2024
- 87% by Q3 2025
Demand is fuelled by sectors requiring specialized specifications — Auto & Ancillaries, Electronics, White Goods, Engineering — where high-end infrastructure, sustainability standards, safety norms and automation-ready layouts are essential.
Pune & Chennai Lead India’s Manufacturing Leasing
As of Q3 2025, Pune and Chennai together account for nearly 75% of all manufacturing leasing in Tier I cities.
Other markets like Bengaluru, NCR, and Mumbai are also witnessing accelerating growth, contributing to nationwide momentum.
Companies Prefer Leasing Over Buying to Preserve Capital
Manufacturers are increasingly shifting to “lease-first” models to avoid heavy upfront investment.
Built-to-suit and ready-built manufacturing facilities offer:
- Faster occupancy timelines
- Reduced capital expenditure
- Access to high-compliance, fully equipped spaces
From 2019–Q3 2025, 76% of ready-built facility demand was concentrated in Pune, Chennai and NCR.
Rising Rentals Reflect High Specification Demand
Rental values for Grade A light manufacturing spaces in the top 8 cities have risen consistently.
Projections show 4%-6% annual rental appreciation, driven by strong demand from engineering, electronics, and automotive sectors.
Manufacturing rentals now command significant premiums over standard Grade A warehousing due to stringent specification and compliance requirements.
Advanced Manufacturing Sectors Will Drive the Next Wave
JLL identifies eight high-potential sectors powering India’s manufacturing ascent:
- Electric mobility
- Renewable energy
- Semiconductors
- Medical devices
- Precision tools
- Aerospace & defence
- Electronics components
- Heavy equipment
These sectors align with India’s goal of raising manufacturing’s share of GDP to 25%, supporting the nation’s push toward Viksit Bharat 2047.
Outlook: India on Track to Become a Global Manufacturing Hub
The manufacturing sector’s strong leasing trajectory, growing preference for Grade A developments, and capital-efficient leasing strategies point to long-term structural growth.
Companies expanding within India’s manufacturing ecosystem are advised to prioritise Grade A clusters with robust infrastructure and flexible leasing models.
With rising domestic capacity and global investors increasing exposure, India’s manufacturing real estate is positioned for sustained expansion.
Also Read: Indian manufacturing market has the potential to reach US$ 1 trillion by 2025-26
