Asset-Light Warehousing Model Gains Traction Amid Global Uncertainties: TVS ILP Joint MD

Large manufacturing companies are increasingly turning to asset-light warehousing and industrial infrastructure models as uncertainty around demand makes them more cautious about committing capital to new capacity, according to Ramnath Subramaniam, Joint Managing Director of TVS Industrial & Logistics Parks.

“In fact, over the last six to eight months, with the global events that have been triggered and the resulting uncertainty around demand, this (third-party logistics) has increasingly become the preferred option for many large manufacturing companies,” Subramaniam told Outlook Business. He added that companies that had earlier planned to expand capacity as utilisation levels rose to 70–80% are now reassessing those plans.

“If they are at 80% today and had projected going to 90%, but demand for the rest of the year looks 10% lower than expected, they are going back to the drawing board and asking: should we still do it, or is there an option for somebody else to do it for us?” he said.

India’s industrial and warehousing sector saw leasing activity rise 15% YoY to 36.8 million sq. ft. in first half of 2026, driven by manufacturing expansion and growing demand from third-party logistics (3PL) players, according to Knight Frank India’s latest India Warehousing Market Report. Leasing across eight major markets increased from 32.1 million sq. ft. a year earlier. Infrastructure upgrades, including the Western Dedicated Freight Corridor, also supported occupier confidence, according to the report.

During the first six months of 2026, manufacturing remained the largest occupier, accounting for 46% of total leasing, at 17 million sq. ft., a 17% YoY increase. Demand was led by automotive, engineering, electronics and energy companies. 3PL was the second-largest segment, leasing 11.1 million sq. ft., or 30% of the total, up 27% YoY.

Why are firms opting for 3PL?

TVS Industrial & Logistics Parks’ Joint Managing Director explained why companies increasingly prefer third-party warehousing and logistics players.

“What helps these companies is that we buy the land, construct the building and give it to them on lease or rental. They also have an amortisation schedule associated with it. What this means is that the investment does not get added to their gross block or fixed assets,” said Subramaniam.

He explained this with an example. If a company were to sell 10,000 motorcycles or scooters in a month and each vehicle costs ₹1 lakh, that would translate into ₹100 crore of revenue without any corresponding addition to fixed assets.

“Because we have made that investment for them. If they make a 10% margin, that is ₹10 crore, which flows directly into their EBITDA. The total capital employed in the business also does not include that ₹10 crore of investment because we have made it for them. So, their return on capital employed looks very healthy,” he added.

The shift, he said, has triggered a significant investment cycle in industrial and logistics infrastructure while increasing customer stickiness for companies operating in the sector. TVS Industrial & Logistics Parks works with manufacturers including Ather, TVS Motor, Alstom, Amber and Nestlé.

“With Ather, we acquired the land, built the facility for them, and they use it for production. The expansion at Hosur was also done by us incrementally. After the first phase of growth, they saw unprecedented demand for EVs, and now we are working with them on another, smaller expansion at Hosur,” said Subramaniam.

TVS ILP entered the warehousing and logistics business in 2000. Since then, it has rapidly scaled its footprint to 12 million sq. ft., of which 10.67 million sq. ft. has been transferred to its InvIT, TVS Infrastructure Trust. The company has committed to transferring a total of 20 million sq. ft. of warehouses to the InvIT by 2028. TVS Industrial & Logistics Parks plans to invest ₹2,500–2,700 crore over the next three years to expand its portfolio.

Its expansion strategy includes new markets such as Siliguri, Kolkata, Guwahati, Silchar, Indore and Raipur, while also expanding in existing hubs such as Hosur, Madurai, Coimbatore and Tuticorin. The company is also evaluating acquisitions of quality warehousing assets at attractive valuations, alongside greenfield development, to accelerate its expansion.

“Over the next two or three years, we expect to complete another 10 million square feet. We will use both organic and inorganic opportunities to achieve this growth,” Subramaniam added.