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India’s manufacturing sector has reached a significant milestone, marking its highest growth in 14 months, even as logistics rents across the Asia-Pacific region remained mostly stable in the first half of 2025, according to a report released by Knight Frank on Wednesday.

The report highlighted that India’s S&P Purchasing Managers’ Index (PMI) climbed to 58.4 in June—its highest level in over a year. This performance not only led the region but was also fueled by a surge in overseas demand, robust output, and a notable increase in employment.

"India's manufacturing sector hit a 14-month high with its S&P Purchasing Managers' Index reaching 58.4 in June, the strongest performance across the region, driven by rising international sales, higher output, and record-breaking employment growth," the report stated.

Logistics Sector Remains Resilient

Despite a rise in vacancies in India’s three biggest logistics hubs, rental values showed strong momentum, increasing by 3.4 per cent year-on-year in H1 2025—an uptick from the 2.1 per cent growth recorded in the previous six months. “India’s logistics sector continues to display strength and stability, driven by the manufacturing rebound, policy support, and sustained occupier interest,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.

Baijal further noted that India is becoming an attractive option for global supply chain realignments, offering both cost benefits and expanding infrastructure.

Mixed Trends Across the Region

The report observed a varied picture elsewhere in the Asia-Pacific. While logistics rents in mainland China continued to decline, growth slowed significantly in Australia and Southeast Asia. Other regional markets saw minor gains, keeping the overall rent index largely unchanged.

Cautious Outlook Ahead

According to Knight Frank, the relative stability in regional rents may be partially due to frontloading of shipments by companies anticipating new tariffs. This strategy has allowed occupiers to manage costs in the short term, but questions remain about the sustainability of demand moving forward. “As firms weigh their strategic priorities, real estate portfolios are increasingly being reconfigured to support more resilient, regionalised supply chains," said Tim Armstrong, Global Head of Occupier Strategy and Solutions at Knight Frank.

He added that companies are now prioritising investments in logistics hubs located near ports, integrated with multimodal networks, and capable of supporting both warehousing and office functions.