The Legality of Operating Dark Stores in Residential Zones: A Zoning Law Perspective Across Indian Metros

Posted On - 22 July, 2025 • By - Asha Kiran Sharma

The meteoric rise of India’s e-commerce sector has transformed not only consumer habits but also the logistics and real estate strategies of companies. Among the more disruptive innovations is the emergence of “dark stores” — non-customer-facing micro-fulfilment centres, often embedded deep within urban landscapes. These facilities enable rapid deliveries of groceries, essentials, and even pharmaceuticals, promising speed and convenience to millions of users. However, their proliferation has raised a critical question: Is it legal to operate dark stores in residential zones under Indian urban planning laws?

This article talks about the legality and regulatory challenges of operating dark stores in residential neighborhoods, with a specific focus on key Indian cities: Bangalore, Mumbai, Delhi, Gurgaon, Noida, Chandigarh, Ahmedabad, Pune, Chennai, Hyderabad, Kochi, and Kolkata. As we shall see, the answer is far from uniform, and navigating this space requires careful attention to city-specific zoning regulations, building norms, and licensing frameworks.

Unlike traditional retail outlets, dark stores function exclusively as backend warehouses — stocking inventory, coordinating deliveries, and serving as nodal points for app-based fulfilment. These stores are typically located within or near residential areas to enable faster deliveries. However, they often operate under commercial or logistics licenses while physically occupying residential properties or mixed-use buildings, creating legal tensions between operational expediency and land use compliance.

This ambiguity has drawn the attention of municipal bodies, resident welfare associations, fire departments, and courts — particularly in metro cities where land use is tightly regulated.

Zoning Laws and Residential Restrictions in India

Urban planning in India is governed by a mosaic of laws, including:

  • State-specific Town and Country Planning Acts
  • Municipal Corporation Acts
  • Development Control Regulations (DCRs) or Master Plans
  • Building Bye-laws
  • The Model Building Bye-laws, 2016 (guiding but not mandatory)

These instruments categorize land into various usage zones — residential, commercial, industrial, public/semi-public, and mixed-use. Each zone permits specific activities. In most cities, warehousing or storage operations are not permitted in strictly residential areas. Where mixed-use is allowed, such activity may still require special permissions, trade licenses, or fire and safety clearances.

Bangalore: In Bengaluru, the Revised Master Plan (RMP) 2031 divides residential areas into R1, R2, R3, and mixed-use categories. Warehousing activities are explicitly prohibited in R1 and R2 zones, which constitute core residential neighborhoods. While R3 and mixed-use corridors offer some flexibility, dark store operations are still subject to zoning clearance and fire safety approval. Municipal authorities like BBMP and planning bodies like BDA have issued multiple warnings and notices to erring facilities operating without proper change-of-land-use permissions.

Mumbai: Mumbai’s Development Control and Promotion Regulation (DCPR) 2034 offers slightly more nuanced rules. While commercial activity is permitted in mixed-use buildings, warehousing and logistics are restricted to designated commercial or industrial zones. Several housing societies in suburban Mumbai have reported dark store operations in basements or ground floors, leading to action under building safety norms and fire regulations.

Delhi: In Delhi, the Master Plan of Delhi (MPD) 2021 — and its upcoming 2041 version — draws clear boundaries between residential and commercial activity. Dark stores operating in unauthorized colonies or non-notified mixed-use streets are liable to be sealed under MCD regulations. Courts have intervened in multiple cases to uphold the integrity of zoning laws, citing noise, traffic, and fire hazards in residential blocks.

Gurgaon: Gurgaon, under the oversight of HUDA and GMDA, permits warehousing only in industrial and commercial pockets as defined under sector plans. The Haryana Development and Regulation of Urban Areas Act, 1975 restricts commercial conversions in residential sectors without express approvals. Multiple dark store units in HUDA- developed areas have faced closure for violating the terms of plot allotment and zoning guidelines.

Noida: The Noida Master Plan 2031 enforces strict zoning segregation, and residential zones do not permit warehousing. Even in mixed-use areas, operating a dark store requires multiple approvals including fire NOC, trade license, and conversion charges. RWAs in Noida have actively pursued complaints against these facilities, citing traffic bottlenecks and safety risks.

Chandigarh: Chandigarh’s zoning framework — under the jurisdiction of the Chandigarh Housing Board and Municipal Corporation — maintains a strict demarcation between land uses. The city’s original planning blueprint (by Le Corbusier) emphasized low-density, well-structured residential sectors. Unauthorized use of residential premises as dark stores is a punishable offence, and enforcement has been particularly rigorous.

Ahmedabad: In Ahmedabad, the General Development Control Regulations (GDCR) 2021 govern land use within AUDA and AMC limits. Warehousing is only permitted in industrial or specific commercial zones. Conversion of a residential plot for dark store usage is highly restricted, and multiple applications for such conversions have been rejected over the past two years.

Pune: The Pune Municipal Corporation (PMC) and PMRDA operate under DCRs that restrict warehousing and logistics to designated zones. Recent audits by the fire department revealed that several dark stores were functioning without requisite permissions in residential colonies, leading to issuance of closure notices and fines.

Chennai: The Tamil Nadu Combined Development and Building Rules, 2019 prescribe that residential buildings cannot host commercial warehousing. The CMDA mandates that any storage of goods, especially perishables or flammables, must be conducted from licensed premises with valid zoning approval and fire NOC. Violators may lose their occupancy certificate.

Hyderabad: Under the Hyderabad Metropolitan Development Authority (HMDA), zoning regulations prohibit dark store operations in pure residential zones. However, in mixed-use corridors (C1 zones), limited warehousing is permitted, subject to traffic and fire safety compliance. The GHMC has cracked down on dark stores in high-rise buildings that violate egress or parking norms.

Kochi: In Kochi, governed by the Kerala Municipality Building Rules (KMBR), 2019, storage and fulfilment operations are restricted to designated areas. RWAs and the GCDA have raised concerns about the illegal use of flats and homes for stocking goods, especially in ecologically sensitive zones. Legal notices have been issued citing violations of land use, zoning, and environmental laws.

Kolkata: Kolkata’s Municipal Building Rules and the West Bengal Town and Country Planning Act, 1979 stipulate that storage space in residential buildings cannot exceed 10 sq.m without formal approval. Several local authorities have initiated action against operators running logistics hubs from apartments and basements.

The operation of dark stores in residential areas presents multiple challenges:

  • Zoning Violations: Use of residential premises for storage or logistics is typically unauthorized and may lead to sealing or cancellation of licenses.
  • Fire and Safety Hazards: Most dark stores do not comply with fire safety standards, particularly in dense housing areas.
  • Public Nuisance: Delivery traffic, noise from loading/unloading, and lack of parking lead to disputes with residents and complaints to municipal bodies.
  • Legal Proceedings: PILs and RWA complaints have led to court interventions, particularly in Delhi, Bengaluru, and Mumbai.

Compliance Roadmap for E-Commerce Companies

To operate within the bounds of the law, companies must:

  • Conduct zoning due diligence prior to signing lease agreements.
  • Obtain an Occupancy Certificate (OC) for commercial usage.
  • Apply for fire and pollution control clearances, especially if storing perishables.
  • Clearly define the purpose of lease in documentation.
  • Maintain logistics traffic plans and avoid overburdening residential roads.

Conclusion

Dark stores’s current operational model, particularly in residential areas, raises substantial legal and civic concerns. Cities across India are tightening compliance measures, and legal enforcement is catching up quickly. Companies must ensure they navigate this evolving regulatory landscape by aligning their operations with local zoning laws and municipal requirements.

Failing to do so may result not only in business disruption but also in reputational and legal liabilities. For long-term sustainability, e-commerce players must reimagine their fulfilment strategy — one that balances speed with legality, and convenience with compliance.

Co-Authors – Adnan Siddiqui and Gauri Jagtap

King Stubb & Kasiva,
Advocates & Attorneys

Click Here to Get in Touch

New Delhi | Mumbai | Bangalore | Chennai | Hyderabad | Mangalore | Pune | Kochi | Kolkata
Tel: +91 11 41032969 | Email: info@ksandk.com