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Market Insight

India unveils 30 more cities winners of the Smart City Challenge

June 28, 2017  | Subscribers Only

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India has selected 30 cities in the third round of the Smart City Mission national programme. With this announcement, India has now selected 90 cities, which means that only 10 spots remain for the 20 cities still competing to win the challenge and secure the related funds to launch smart city projects. Total investment for the 90 cities reached INR191,155 crore (USD 29.6 billion).

In this round of selection a total of 45 cities competed for 40 available opportunities. However,  only 30 cities were selected to ensure feasible and workable plans. As part of the Mission the government will provide INR500 crore (USD77.4 million) to each of the winning cities for a five-year period.

The 30 cities that won the challenge in this round are: Thiruvananthapuram, Naya Raipur, Rajkot, Amaravati, Patna, Karimnagar, Muzaffarpur, Puducherry, Gandhinagar, Srinagar, Sagar, Karnal, Satna, Bengaluru, Shimla, Dehradun, Tiruppur, Pimpri Chinchwad, Bilaspur, Pasighat, Jammu, Dahod, Tirunelveli, Thoothukudi, Tiruchirapalli, Jhansi, Aizawl, Allahabad, Aligarh, Gangtok.

Our analysis

In June 2015 the Ministry of Urban Development (MoUD) launched the Smart City Mission and Challenge to expand smart cities in India. The Smart City Mission’s aim is to drive economic growth creating 100 smart cities, improving citizens’ quality of life, creating a clean and sustainable environment, upgrading and deploying new infrastructure, and setting examples to be replicated by other cities. The Mission is planned to last for five years, running from full year 2015-16 to 2019-20. After this time frame, the Mission could be continued and adapted in the light of the results and lessons learned during this period. To assign the available funds cities participate in a contest labelled Smart City Challenge.

Each city participating in the contest presents a proposal including a pan-city initiative (i.e. a solution applied to the whole city) and area-based developments in the form of retrofitting, redevelopment, or Greenfield projects. The need to present both area-based and city-wide initiatives was established to ensure that the whole city population could benefit from the creation of smart city projects.

The Smart City Mission and Challenge does not specify the type of solution to be proposed by the city which can include solutions in the energy and efficiency space such as smart water metres, or in the safety and security space such as intelligent video-surveillance system. While drafting the proposal, each city should account for its local characteristics and needs.

The selection process was designed to unfold in two stages: intra-state selection identifying cities to compete in the next stage and a country-wide competition among cities in multiple selection rounds. Each winning city needs then to create a special purpose vehicle (SPV) which will be in charge of the implementation, plan, appraisal, release of funds, management, monitor, and operation of the smart city developments projects. While industry partners can hold shares in the SPV, the state/union territories (UT) and the urban local bodies (ULB) need to hold a majority share of the SPV.

The central government will invest a total of INR48,000 crores (USD7.4 billion) over the five years, an average of INR100 crore per city per year. Funding will also come from the State and the ULB. The first year, winning cities will receive a larger sum of INR200 crore to be better equipped to start the projects. The aim of the Government fund is not to fully sustain the cost of all the projects, but is to jump start the smart city market and act as a catalyst attracting further investments.

The relevance of national strategies: opportunities and obstacles

National strategies for the creation of smart cities show the importance and potential of the market. Smart cities bring multiple benefits at both local and country level. Smart city projects improve the quality of life, generate efficiencies and optimise service for government and for citizens but are also a driver of economic growth and a magnet for industry investments in the country and in the different cities.

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India Smart City Mission and Challenge key facts

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The Indian smart city market is moving: Sterlite Tech was selected as system integrator for Kakinada smart city project

Developments are underway in the previously selected cities. Kakinada was chosen in the first round of selection of the smart city challenge. Kakinada smart city project aims to bring transformational changes in the everyday living experiences of over 3.25 lakh citizens of Kakinada, through governance and improved delivery of citizen services. Sterlite Tech will design, build, and manage the Kakinada Smart City for the next six years.

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Other smart city plans and strategies

Different countries around the world have developed different national and city levels frameworks and strategies to launch smart cities’ projects. In December 2015, the United States Department of Transportation (DoT) launched its Smart City Challenge inviting mid-size US cities to present mobility and transport related projects in their cities. A total of 78 cities replied with their proposals, seven of them were shortlisted as finalists, and one won (Columbus, Ohio). As part of the challenge the DoT committed USD40 million for the winning city, with another USD10 million committed by Vulcan Inc.

The European Union is also involved in the expansion of smart cities. The European Union 2020 strategy aims to create a smart, inclusive, and sustainable growth in Europe. Within this framework, innovation as a key role to strengthen Europe’s financial and economic situation, to create jobs, and to tackle major challenges such as energy efficiency and climate change.

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The full insight is available as part of the Smart Cities IoT Intellignce Service. For further information about IHS Markit Smart Cities and IoT research please contact pablo.tomasi@ihsmarkit.com

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Europe India USA
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