IEL Bets Big On Emerging Cities As Warehousing Space Quadruples, Driven By E-Comm, Policy Push

Indian Extraction Limited (IEL), a key player in India’s logistics and warehousing sector, is betting big on the expansion of warehousing infrastructure in Tier II and III cities. Since 2017, these regions have seen a fourfold rise in warehousing space, a trend Ajay Gupta, Managing Director of IEL, attributes to the rapid growth of e-commerce, manufacturing, and improved regional infrastructure. “This growth shows no signs of slowing down,” Gupta tells

Bizz Buzz, highlighting the strategic role of government initiatives like the Urban Infrastructure Development Fund and PM Gati Shakti in enhancing connectivity and reducing operational costs. IEL is aligning its expansion strategy with these policies, choosing locations that promise long-term viability. Gupta adds that the company is focused on building Grade-A facilities with sustainability features, automation readiness, and built-to-suit capabilities. “Investors today seek quality, compliance, and connectivity—standards we are embedding into every IEL project,” he says

Tier II and III cities have seen a fourfold increase in warehousing space since 2017. What do you think is driving this surge, and how will the industrialist itself leverage this trend?

Since 2017, warehousing space in India’s Tier II and III cities has increased fourfold, and this growth shows no signs of slowing down. This trend is mainly driven by the rapid expansion of e-commerce, organized retail, and manufacturing sectors. According to JLL India, these cities contributed nearly 100 million square feet of warehousing stock out of the 533.1 million square feet across India in 2024. That’s about 18.7 per cent of the total warehousing footprint.

This growth is supported by several important factors. First, land in these regions is more affordable, and operational costs such as labour and utilities are much lower than in metro cities. Second, infrastructure in these smaller cities has improved due to government efforts, with better roads and stronger connections to highways and ports. Third, the implementation of GST has encouraged companies to spread out their distribution networks, making it easier to build warehouses closer to consumers.

With the government's push through schemes like the Urban Infrastructure Development Fund, how do you see the role of public policy shaping warehousing and logistics ecosystems outside metro cities?

Government policies are playing a key role in developing warehousing and logistics in India’s non-metro cities. One major initiative is the Urban Infrastructure Development Fund (UIDF), which was launched with a budget of Rs 10,000 crore. The aim is to improve basic infrastructure in Tier II and III cities, which directly supports warehousing, transportation, and industrial development. Better roads, drainage, water, and electricity make these areas more suitable for businesses to set up storage and logistics operations.

Alongside UIDF, the PM Gati Shakti plan is helping create better connectivity between highways, railways, and ports. This helps reduce transportation time and cost, making logistics more efficient. The development of industrial corridors and dedicated freight routes under this program will also improve access to smaller cities, making them new hubs of activity.

At IEL Limited, we understand the importance of aligning our strategy with these public policies. We carefully study which cities will benefit from UIDF funding or other infrastructure upgrades. This helps us choose the best locations to build our warehouses. Our goal is to ensure that our facilities are not only modern and efficient but also easy to reach for customers and partners.

These government-led improvements also bring more stability to long-term investments. By choosing cities that are supported by public infrastructure projects, we reduce operational risks. The growth of public infrastructure and proactive government programs gives companies like ours a strong foundation to build upon. In the long run, these policies will help smaller cities compete with metros in terms of warehousing and logistics, unlocking economic growth across a wider part of India. IEL plans to grow alongside these cities and contribute to building an efficient national supply chain.

Grade-A warehousing is expected to hit 400 million sqft by 2027. In your view, what are the critical differentiators that define a ‘Grade-A’ facility, and how is IEL incorporating those standards?

A ‘Grade-A’ warehousing facility refers to a high-quality warehouse built to meet international standards. These facilities are usually located near industrial hubs or transport corridors and are designed to handle modern logistics needs. They feature higher floor load capacity, better internal roadways, a wide turning radius for trucks, and a minimum clear height of 11 meters to allow for vertical stacking. They also include fire safety systems, CCTV surveillance, and modern security infrastructure.

Energy efficiency is another important part of a Grade-A warehouse. Many facilities now include solar panels, rainwater harvesting systems, and sustainable construction practices. These warehouses are built using materials and designs that reduce energy use, which helps companies lower their carbon footprint.

According to JLL India, Grade-A facilities now make up 30 per cent of warehousing stock in emerging Tier II and III cities, showing that demand for better-quality infrastructure is spreading beyond metros. This shift is helping businesses move closer to customers while still maintaining operational standards.

At IEL Limited, we are committed to meeting all the requirements that define Grade-A warehousing. Our future projects are being planned with high standards in mind—from location selection to construction quality and sustainability. We are building near major highways and industrial zones to ensure smooth transport access. Our warehouses are designed to support automation, efficient storage systems, and flexible expansion plans.

We also prioritize green building practices and are working toward energy-efficient certifications. This ensures we not only support our clients’ operational goals but also contribute to environmental responsibility. Grade-A warehousing is the future of storage and logistics in India, and IEL is investing in the infrastructure and technology needed to deliver this quality in every project we take on.

The warehousing sector saw a 203 per cent jump in investments in 2024. What trends or investor behaviours are you observing, and how do you foresee this affecting market competition and innovation?

In 2024, India’s warehousing and logistics sector attracted investments worth $1.96 billion, marking a 203 per cent rise from the previous year, according to Knight Frank. This surge is driven by multiple factors, including the rapid growth of e-commerce, quick-commerce, and supply chain modernization. Companies are investing heavily in logistics to meet the increasing demand for faster delivery, especially in Tier II and III cities where consumption is rising quickly.

Another key trend is the rise in demand for built-to-suit (BTS) facilities. These are custom-designed warehouses made to meet the specific needs of individual clients. Such warehouses are more efficient and cost-effective over the long term. There is also increasing demand for warehousing with sustainability features like solar power, rainwater harvesting, and green building certification.

Investors are looking for quality assets that offer long-term returns. They prefer Grade-A warehouses in locations with good connectivity and infrastructure support. In addition, foreign investors are entering the market through joint ventures and partnerships, further boosting capital flow into the sector.

At IEL Limited, we are actively responding to these trends by planning and developing BTS warehousing facilities in growing cities. We focus on incorporating sustainable features and ensuring that our warehouses meet Grade-A standards. Our strategy includes selecting sites that are close to major industrial corridors and that benefit from public infrastructure development.

By aligning our projects with current investor preferences and industry needs, we ensure our facilities are not just functional but also future-ready. The market is becoming more competitive, and innovation is key. Through modern design, smart storage solutions, and strong project execution, IEL aims to lead in this high-growth sector and continue delivering value to clients and investors alike.