What is the ‘Smart City Mission’ initiative?

The IESE Business School[1]Cities in Motion Index (CIMI) 2018’ ranks New York as the best city in the World (from 165 selected cities) to live in, followed by London and Paris in terms of sustainability and the quality of life of their inhabitants, both in the present and in the future. New York’s first place in the ranking is attributed to its performance in the dimensions of economy (position 1), international outreach (position 3), human capital (position 4) and mobility and transportation (position 4). It though was low in the dimensions of social cohesion (position 109) and the environment (position 99).

Exhibit 1: Top 10 liveable Cities in the World based on Different Index’s 

Only three Indian cities figured in the CIMI study and they too were at the bottom of the ranking amongst the selected 165 cities with Mumbai at 158, Delhi at 159 and Kolkata at 163. The low ranking of Indian cities in the study is attributable to the poor scoring of these cities on each of the 9 key dimensions of the ranking which include economy, human capital, technology, the environment, international outreach, social cohesion, mobility and transportation, governance and urban planning. Crowded and unplanned cities with multiple layers of red-tape, huge income disparity, severe traffic jams, pollution and dumping of waste across the cities have adversely impacted the scoring on the above dimensions.

Prime Minister Modi, cognisant of India’s challenges and as part of his mission to transform the nation, seeks to transform cities in India into clean and sustainable centres of economic activity through the ‘Smart City Mission’. The Smart City mission is expected to drive economic growth and improve the quality of life of people by enabling local development and harnessing technology to create smart outcomes for citizens. It is a giant leap in tackling the challenges of rapid urbanisation in India.

A Smart City means different things to different people. The conceptualisation of Smart City, therefore, varies from city to city and country to country, depending on the level of development, willingness to change and reform, resources and aspirations of the city residents. The Smart City concept originated with the Smart Planet Initiative of IBM in 2008. As the concept gained popularity, many countries worldwide planned investments to prepare their cities for the future. A smart city is characterised by an urban region having modern technological infrastructure, access to smart energy, smart mobility, smart public utility services and ultra- fast communication network.

In India, the picture of a Smart City contains a wish list of infrastructure and services that describes the level of aspiration of Citizens. The aspirations and needs of citizens are planned to be fulfilled by building the entire urban eco-system comprising of physical, institutional, social and economic infrastructure adding on layers of smartness through Smart Solutions. This will be achieved by following urban planning best practices and taking a people first approach.

The core infrastructure elements in a Smart City include:

  • Adequate and clean water supply,
  • Dependable and adequate electricity supply,
  • Efficient sanitation, including solid waste management,
  • Reliable public transport and urban mobility,
  • Affordable housing options for all the citizens,
  • Robust IT connectivity and digitalisation,
  • Good governance, especially e-Governance and citizen participation,
  • Sustainable environment,
  • Safety and security of citizens, particularly women, children and the elderly, and
  • Accessible and efficient health and education systems.

The Smart City mission in India follows an area-based strategy, unlike many other government initiatives which follow a project-based approach. The components of these area-based development strategies are:

  • City improvement or retrofitting: Retrofitting envisagesproviding more intensive infrastructure service levels and several smart applications in an existing built-up area (more than 500 acres) to achieve Smart City
  • City renewal or redevelopment: Redevelopment envisagesreplacement of the existing built-up area (More than 50 acres)by adopting anew layout with enhanced infrastructure with mixed use of land, higher FSI and increased An example of this is the planned redevelopment of Bhendi Bazaar, a vibrant old-style market place and residential area in Mumbai into a modern commercial and residential development.
  • City extension or greenfield development: Greenfield development will introduce most of the Smart Solutions in a vacantarea (more than 250 acres) using innovative planning, plan financing and plan implementation Greenfield developments are plannedaround cities toaddress the needsof the expanding population. One well known exampleof Greenfield developmentis the GIFT City in Gujarat(Prime Minister Modi’s home state) near Ahmedabad.
  • Pan city development of smart solutions: Pan-city development envisages application of selected Smart Solutions to the existingcity-wide infrastructure. Application of Smart Solutions involvesthe use of technology,information and data to make infrastructure and services better. For example, applying SmartSolutions in the transport sector (intelligent traffic management system) and reducing averagecommute time or cost to citizens will have positive effects on productivity and quality of life of Another example iswaste water recycling and smart metering which can makea substantial contribution to better water management in the city.

India plans to develop 100 smart cities distributed amongst its states based on an equitable criterion[2]. A list of state wise distribution of number of cities for identifying smart cities is shown below:

Exhibit 2: List of State Wise Distribution of Number of Cities

Each of the Smart Cities that are being developed are expected to encapsulate in their plan either a retrofitting or redevelopment or greenfield development model, or a mix thereof and a Pan-city feature with Smart Solution(s). The pan-city development is an additional feature to be provided.

Benefits of Smart City Mission:

The comprehensive development undertaken in the Smart City Mission will help build inclusive[3]cities, creating employment, enhancing income for all and improving the overall quality of life for all its residents. Some of the benefits of the initiative are;

Social Benefits

  • Brings efficiency, accountability and transparency while offering public services to citizens by providing all services online, thus making governance citizen friendly and cost effective
  • Reduces exploitation by corrupt officials in availing public services
  • Achieves ecological balance by preserving and developing open spaces like parks, playgrounds and other recreational spaces, enhancing the quality of life of citizens
  • Reduces congestion, air pollution and resource depletion by encouraging non-motorised transportation, creating walkable and cyclable localities[4]
  • Improves liveability of the city as area-based development transforms existing areas, including slums into better planned living spaces
  • Reduces crime and ensures better safety of citizens especially children, women and elderly through IT enabled surveillance and video crime monitoring
  • Improves energy efficiency and reduces leakage through smart metering, using energy efficient lighting solutions and mandating at least 80% energy efficient green buildings
  • Reduces carbon footprints by usage of alternative energy sources and re-cycling of water and waster
  • Enables better disaster management by applying smart solutions to infrastructure and services

Economic Benefits

  • Investment of over Rs.2.04 tr (AU$40.8 bn) over the next 5 years providing strong boost to local economic activity
  • Promote focussed leisure and business travel as cities are planned to be identified based on their main economic activity, local cuisine, art and culture, etc.
  • Propel strong demand for building and construction material and allied industries
  • Propel strong demand for technology solutions
  • The initiative has potential to generate significant employment opportunities in the area

The ‘Smart City Mission’ will bring in visible improvement in cities across India with encroachment free public areas and no shabby overhead electrical and other wiring (underground wiring). Overall it will provide a better lifestyle for all its citizens and will also improve India’s image globally, as a place to travel and do business.

Implementation Challenges

The Smart City Mission is to be implemented at the city level by a special purpose vehicle (SPV) created for the purpose. The SPV will plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the Smart City development projects. The SPV is headed by a full time CEO and has nominees of Central Government, State Government and Urban Local bodies on its board. The process of implementing the scheme is detailed below:

  • Letter from the Ministry of Urban Development (MoUD) to all state government to shortlist potential Smart Cities based on pre-defined qualifying criterion according to number of Smart Cities distributed to the state
  • Based on the response from the State’s, an initial list of potential 100 Smart Cities is announced by the Ministry of Urban Development
  • Each potential Smart City prepares their Smart City Proposal assisted by a consultant (from a panel prepared by MoUD) and a hand holding external agency[5].
  • The City formulates its own concept, visions, mission, plan for mobilisation of resources and intended outcomes in terms of infrastructure up-gradation and smart applications.
  • The Smart City proposal is evaluated by a panel of experts
  • The selected cities declared as round 1 Smart Cities
  • Selected cities set up SPV and start implementation of their Smart City Proposal. Other Cities prepare to improve their proposal for the next round of the challenge.

The panel of experts evaluated the proposals received from cities and an initial list of the top 20 cities was released in January 2016. Another 13 cities were selected in May 2016, followed by 27 cities in September 2016 and another 30 in mid-2017. Nine more cities were added to the list in early 2018 taking the total number of cities picked under the mission to 99.

These cities would receive Rs.5 bn (AU$100 mn) in funding from the central government to implement their plans over a period of 5 years. An equal amount, on a matching basis, would have to be contributed by the state or the urban local bodies.

Exhibit 3: 99 Proposed Smart Cities to make Investments of AU$40.8 bn

91 of the 99 cities have set up a SPV[6]as required under the mission. The SPV’s in most cities have already begun work on a central command and control system that will use information and communication technology to manage services such as water supply, sanitation, housing and waste management. A total of 3,183 projects worth AU$29 bn have been planned at this stage of which projects worth AU$ 0.99 bn have been completed. Work has commenced in projects worth AU$4.65 bn and tenders have been issued for projects worth AU$3.44 bn.

While it’s still early to see a visible change due to the implementation of the Smart City mission, some initiatives under the mission across cities are noteworthy. Some of these are shown pictorially below:

Exhibit 4: Command and Control Centre Ahmedabad and Vadodara

Exhibit 5: Connected Devices[7]at Command and Control Centre Ahmedabad

Source: Ahmedabad Smart City Project Presentation

 Exhibit 6: Upgradation of Bengaluru City Roads (Before and After Implementation)

Exhibit 7: Cycle Track – Bhopal (A Non-Motorised Transportation Development Initiative)

Exhibit 8: Shabby Conventional Telecom Towers being replaced by Wireless Smart Poles – Bhopal

Exhibit 9: Utility Ducts on Footpath for Housing Electrical and Optic Fibre Cables – Bhopal and Surat

Exhibit 10: Facelift of Slums & Self Defence Training for Women – Bhubaneshwar

Exhibit 11: Facelift of Public Spaces – Varanasi

The pictures above do raise hopes that the smart Indian cities of the future will provide a better quality of life to its citizen. The progress though on this initiative has been slow. The conclusion of the four rounds of challenge for the selection of 100 cities itself took over 3 years. Till date work has commenced on only 16% of the projects planned and tenders invited for another 12% of the work. Considering the above and the already completed work of about 3.4%, nearly 69% of the implementation is still in report stage. This means that a significant pick up in implementation pace will be required to achieve the Smart City Mission targets of achieving completion by 2020-21 for round 1 cities, 2021-22 for round 2 and 3 cities and 2022-23 for round 4 cities.

Implementing a scheme like the Smart City mission in a democracy like India is not an easy task. The implementing agencies have to face many difficulties and challenges. Some of the key challenges are

  • Co-ordination and collaboration between multiple central, state and local government agencies for obtaining clearances in a timely manner
  • Time taken for drawing up plans with consultants, finalising technical specifications, preparing detailed drawings and cost estimates, preparing detailed project report and thereafter tendering and awarding contract in a bureaucratic set up plagued with red tape.
  • Difficulties in getting all utilities on board and non-availability of data for present network of utilities
  • Lack of interest from contractors to implement such projects
  • Arranging for Project Funding
  • Challenges in procuring land and space availability to accommodate various utilities
  • Project execution on functional roads drawing backlashes from motorists and activists
  • Disruption from Media
  • Political setback and bounces

Exhibit 12: Challenges of Executing on Functional Roads

Exhibit 13: Media and Activists Backlash

The government has tried to address some of these challenges by involving senior level officials and politicians from the centre, the state and the city in various committees set up for enabling smooth co-ordination between the various government agencies for implementing the smart city mission.

The government has also mandated cities to seek convergence at planning stage itself with other central and state government programs like the Atal Mission for Rejuvenation and urban Transformation (AMRUT), Swaach Bharat Mission (Clean India Mission– refer our Grassroots Q2, 2017), National Heritage City Development and Augmentation Yojana (HRIDAY), Digital India (Refer our Grassroots Q3, 2017), Skill development, Housing for All (Refer our Grassroots Q1, 2018), construction of Museums funded by the Culture Department and other programs connected to social infrastructure such as Health, Education and Culture. This would also enable in overcoming some of the challenges that may arise while implementing the mission. The Ministry of Urban Development, the nodal ministry for the ‘Smart Cities’ mission has also identified few key impactful projects for early completion (before national elections in 2019) and is working closely with the respective State and City authorities to complete these projects. 

Our View 

We view ‘Smart City Mission’ as one more key step taken by the Modi government to transform India from a developing to a developed nation, wherein many cities in India will compete over the next few years to be the most liveable city in India and at some stage, few of these cities will compete to be amongst the most liveable cities in the world.  While the progress of the initiative so far has been tepid, we believe that with most of the ground work now having completed and the irritants to execution being addressed, the pace of implementation moving forward should improve. The fast tracking of some of the impactful projects with the national elections in mind should improve the implementation ratio significantly in the next one year.

With IT as its core strength, India has the potential for setting up a smart city infrastructure that can be created and replicated in other cities in India and anywhere across the globe. Some of the Smart Indian Cities have the potential to emerge as model cities that set standards for modern urban planning.  Projects initiated under the Smart City mission like the upgradation of city roads with cycling tracks, broad foot paths and nice landscaping (created as an alternative for motorised transport), open spaces created for public use, facelift of slums and other public spaces and online delivery of public services using technology have already started creating a feel good factor about the mission in some of the cities. Monitoring cameras and ICT have been used successfully to reduce crime and driving offenses in some of these Cities.

While the outcomes of the above initiatives are good, a lot more is desirable in some of the areas under implementation. The Bus Rapid Transportation System (BRTS), one of the initiatives under the Smart City mission, has created traffic chaos in Pune. The planned migration from private transportation to the new bus system is a distant dream as the connectivity, frequency and quality of buses under the new system is still very poor forcing citizens to travel by private vehicles. With not much changeover to public transportation, the time taken to travel short distances of about 3-5 kms in Pune by private vehicles has increased from say 5-10 minutes to anywhere between 30 to 60 minutes primarily due to the BRTS. Ironical, but the blame for the failure of the local administration to rollout an efficient BRTS ends up with Prime Minister Modi, with Modi’s mission of developing Smart Cities termed as a failure by many politicians as well as local citizens.

Hence besides being timely, the implementation hereon will also need to be efficient both from construction/development of the facility (the road connectivity and construction in case of BRTS example at Pune) as well as execution of the service being provided (frequency and quality of buses) so that citizens are not inconvenienced by the facilities being created with a promise of better quality of life in the city. Hopefully, from the experience of the initial implementation, the local administrations will improve on their execution.

Nevertheless, we believe that the Smart City Mission will

  • Provide better planned spaces offering better quality of life for its citizens
  • Reduce congestion, air pollution and resource depletion
  • Bring efficiency and transparency in availing public services
  • Reduce crime through IT enabled surveillance and video crime monitoring
  • Generate employment opportunities
  • Propel strong demand for Technology solutions
  • Propel strong demand for building and construction materials
  • Better equip the cities to accept influx of migrants from villages and smaller towns 

Exhibit 14: Investment opportunities emanating from Smart City Mission


[1]The IESE Business School is based in Barcelona, Spain and ranks amongst the top business schools in the world, ranks 11thin the World as per the Financial Times Business School Rankings.

[2]The criterion gives equal weightage to urban population of the State and the number of statutory towns in the State while calculating the number of cities to be allocated to a State.

[3]An inclusive city as per the World Bank is one that values all people and their needs equally. It is one in which all residents including the poorest of poor have access to legal and affordable housing, affordable basic services such as water, sanitation, electricity supply, etc., and access to sustainable livelihood.

[4]Walkable & Cyclable localities provideall necessary administrative services within walking or cycling distance

[5]Handholding agencies include the World Bank, Asian Development Bank, Japan International Cooperation Agency, US Trade and Development Agency, AFD France, KfW Germany, Department of International Development, UK, United Nations Habitat, United Nations Industrial Development Organization, etc.

[6]The SPV is a public limited company with the state and local urban body holding 50:50 equity shareholding and is run by a professional CEO.

[7]VMD – Visual Metrics Display; CCTV – Closed Circuit TV; ITMS – Integrated Transportation Management System; SWM- Solid Waste Management; SCADA – Supervisory Control and Data Acquisition System