Chennai tops in leased manufacturing space absorption in India: JLL

India's leased manufacturing space absorption was at 6.6 mn sq ft in 2020. Chennai, Pune and Delhi NCR topped with three-fourths of leased manufacturing space deals in 2020

Chennai has topped the charts, with a 36 per cent absorption of leased manufacturing space, followed by Pune at 20 per cent and Delhi NCR at 18 per cent, of the transactions in 2020.

According to a JLL report, India’s leased manufacturing space absorption was at 6.6 million sq ft in 2020. Chennai, Pune and Delhi NCR, along with their surrounding areas, topped the list with almost three-fourths of the leased manufacturing space transactions in 2020.

The neighbouring areas of Chennai include Oragadam, Mannur, Marai Malai Nagar, Vallam, Tada and Sricity, among others.

Electronics (mainly mobile manufacturing), auto, IT/ITeS are among the key sectors that leased out large space in and around the City.

Ramesh Nair, CEO & Country Head, India, JLL said that 2020 will be remembered as a period when the Covid-19 pandemic transformed lives and businesses world over. The year brought with it several challenges and risks that were mitigated over a period of time, especially in India’s manufacturing space. This has helped the country establish itself as a key manufacturing hub globally, and has put it on a double engine growth path, the engines being 'Make in India 2.0' and 'Atmanirbhar Bharat' (self-reliant India).

The country’s primary vision through the year has been to build manufacturing competitiveness through economies of scale, reducing imports, increasing exports and boosting domestic demand. Improvements in Ease of Doing Business as a result of active interest from several states also led to easy and hassle-free support to investors in the manufacturing sector. Besides, forming and successfully implementing the Production Linked Incentives Programme has given the sector a major boost, Nair said.

Leased manufacturing spaces have gained strength in 2020 with strong absorption of built manufacturing leasing spaces in top eight cities from several sectors including electronics and mobile manufacturing, electrical equipment, white goods, packaging etc. Notably, Chennai, Pune and Delhi NCR were in pole positions in 2020, with nearly three-fourths of the total leased manufacturing absorption in top eight cities. Bengaluru, Ahmedabad, Mumbai and Hyderabad have also shown strong growth trends driven by some specific sectors.

Also, in the ‘regionalisation’ battle to attract manufacturing investments, India stood out in 2020, said Nair.

He added, a closer look into announced greenfield manufacturing FDI projects in 2020 reveals that India leads the pack among MITI-V countries (Malaysia, India, Thailand, Indonesia and Vietnam) with the largest number of projects announced as well as investment committed in 2020.

Among all uncertainties during the Covid-19 pandemic, 2020 has catalysed the manufacturing and distribution supply chain growth story of India by creating a significant window of opportunity to emerge as a global manufacturing hub. According to an estimate by the Government of India, manufacturing has an opportunity to reach approximately 25 per cent of its GDP by the next 10-15 years, compared to the present 15%. Manufacturing sector is enroute a sturdy and sustainable future, Nair said.

On the outlook, JLL said that in a recent Morgan Stanley research titled ‘India’s Manufacturing-At an Inflection Point’, it is estimated that India’s manufacturing as a share of GDP will rise from approximately 15 per cent in 2019 to 20 per cent by FY30, implying that manufacturing pie in India will increase 3x by 2030. India has a unique opportunity in leveraging its vast pool of skilled resources, competitive costing, inherent strengths, eco-system & positioning in the global supply chain reconfiguration race. Several initiatives, policy and incentive packages offered in 2020 and more upcoming is expected to keep the manufacturing sector warm and buzzing in the next few years.