Why this is important to Wisconsin businesses: Sectors of opportunity include energy, water, waste and transportation.
India’s urban population is projected to increase from 370 million in 2015 to 590 million in 2030, which is expected to change the economic, social and political landscape of the country. This urbanization brings with it a host of environmental and humanitarian issues, ranging from pollution to lack of civic amenities like drinking water, sewage and electricity. However, urbanization may also mean significant opportunities for businesses. That said, the Government of India launched its flagship program, the 100 Smart Cities Mission, in June 2015 to achieve urban transformation, drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology. The mission outlines core elements required for smart urban planning, such as access to water, electricity and affordable housing; urban mobility; good governance; and sustainable waste management. As of January 2018, the government had announced 99 cities to be included in the initiative, with a total estimated investment of $32 billion.
Financing of the smart cities will occur through special purpose vehicles set up at city level in the form of limited companies, and is jointly promoted by the state government and local government bodies, with equity shareholding split 50:50. The federal government will provide $77.5 million per city over a span of four years: $31 million will be allocated in the first year and $15.5 million for each of the next three years. State governments are expected to match the federal government’s funding of $31 million for each of their respective cities. The remaining investment is to be raised by the local government body responsible for each specific smart city. Funding is being sought through foreign direct investment (FDI) as well as from the domestic private sector.
Private sector participation is needed, and this will create opportunities for domestic and foreign investors interested in public-private partnerships in many sectors, including IT infrastructure, energy management, environmental sustainability, GIS mapping, engineering, and sanitation. Beyond basic infrastructure needs such as roads, transportation and housing, smart cities will also channel private investments into urban India’s social infrastructure in areas such as health care, public safety, and education.
The selected cities have already begun to make some progress, although there is still a long way to go. As of February 2018, the central government had released $1.53 billion to the states for the initiative, allowing cities to take up projects including smart roads, rejuvenation of water bodies, bicycle tracks, walking paths, smart classrooms, skill development centers, upgrading health facilities, and multi-city projects like integrated command and control centers. So far, 243 projects worth $705 million have been completed, and work orders have been issued for 510 projects worth $3.06 billion. In addition, about 287 projects involving investment of $2.19 billion are in the bidding stage.
There are, however, a number of issues and concerns that threaten to slow down the initiative, including delays in the clearance and approval of projects, lack of coordination between different stakeholders, poor financial health of local government bodies, and lack of investment in capacity building.
Undoubtedly, the Smart Cities project will serve as an engine for high-tech investment, which in turn will lead to growth of the Indian economy. There is a tremendous need for smart solutions in the areas of energy, water, waste and transportation.