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Narendra Modi's smart cities need over $150 billion investmen: Report

The Prime Minister Narendra Modi government's vision of creating 100 smart cities will require an investment of over $150 billion over the next few years with private sector being a significant contributor, according to Deloitte report.

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Sanjeeb Kumar Sahoo
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Smart Cities Mission

NEW DELHI: The Prime Minister Narendra Modi government's vision of creating 100 smart cities will require an investment of over $150 billion over the next few years with private sector being a significant contributor, according to Deloitte report.

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“$150 billion needs to be invested in the development of smart cities in India over the next few years,” said Deloitte in its report.

“Of this, the private sector contribution is expected to be 80% (~$120 billion). Several challenges remain with respect to the development of smart cities including those related to project funding, project management, government decision making and policy & regulatory framework. Deloitte expects that despite existing challenges, service providers will increase investments in the development of smart city solutions,” said Hemant Joshi,Technology, Media and Telecom Leader at Deloitte India.

Major service providers will also continue to invest heavily in infrastructure solutions relevant for smart cities (e.g., Wi-Fi, fibre networks, and backhaul networks).

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“Several challenges remain with respect to the development of smart cities including those related to project funding, project management, government decision making and policy & regulatory framework. While several cities have made incremental investments in smart solutions, the challenge will be to replicate these on a larger scale,” said Joshi.

Deloitte expects that despite existing challenges, service providers will increase investments in the development of smart city solutions. Major Service Providers (SPs) will also continue to invest heavily in infrastructure solutions relevant for smart cities (e.g., Wi-Fi, fibre networks, and backhaul networks).

As “Smart” solutions are heavily dependent on ICT, SPs will play a significant role in smart cities. In 2016, SPs will participate in (and lead in many cases) consortiums for responding to RFPs for smart / digital solutions for various city and state governments.

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“To achieve higher network monetization and to avoid commoditization (of their networks), SPs will lead in the development and deployment of services in smart cities. SPs have started partnering with software and hardware vendors for the co-development and POC deployments of these solutions,” he said.

Over the next 10-15 years, these cities will emerge as key technology, economic, and social hubs for the country. We believe that SPs that expect to be serious players in smart cities will take a center-forward position in leading consortiums in the development of smart cities.

Population in urban centres is expected to increase from 350 million to approximately 700 million over the next 10 to 15 years, putting severe pressure on infrastructure, city finances, roads, facilities, and resources. These urban clusters will emerge as the centres of economic growth and contribute over 75% of India’s GDP by 2030.

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To meet this demand, the government has initiated two programs with an initial outlay of $7.513 billion each – “Smart Cities Mission” for 100 new cities and the “Atal Mission for Rejuvenation of Urban

Transformation (AMRUT)” for the upgradation of 500 existing cities.

The 100 new smart cities have been allocated to states based on the proportion of urban population and the number of towns. Consequently Uttar Pradesh (13), Tamil Nadu (12) and Maharashtra (10) have been allocated the highest number of smart cities.14 Selection of smart cities will happen over three years through a two-stage evaluation process to be carried out every year.

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Smart cities initiative are an attractive opportunity for the private sector across a number of areas:

• Citizen services - Digitization of records and taxation, DBT

• Safety and Surveillance – Video, policing, crime records management

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• Smart Buildings – Intelligent Building Management system, digital HVAC

• Education – Remote education, online education, skills development

• Healthcare – Remote healthcare, connected devices

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• ICT infrastructure – Fibre, Wi-Fi and communication equipment, backhaul networks

• Sustainability – Pollution management, disaster management, NOCs, waste management

• Energy & utilities – Smart grids, solar power plants, street lighting, water

• Smart transportation – Electric vehicles, intelligent parking, and traffic management solutions

Based on the Indian context, we believe that certain smart city product solutions are likely to see faster

adoption than others driven by ease of implementation and impact.

Several cities have initiated deployment of smart solutions, more are expected to incrementaly implement these solutions over the the next 5-10 years. Brownfield deployments include:

• Smart Policing (Bangalore Police) - Automated FIR registration in ~100 malls

• Smart Traffic management (Bangalore Police) – Monitoring of traffic violations on a Blackberry systems (e-challan), automated traffic monitoring and finger print identification system16

• Smart Public Transport17 (Ahmedabad) - Bus Rapid Transportation System (BRTS) with Integrated

Transportation Management, Advanced Vehicle Tracking System, Fleet Management, Automatic Fare Collection, Passenger Information Systems

• Smart Water Management18 (Pimpri) - Real time data (electrical efficiency, flow, pressure level, valve operation, filter operation) is available to engineers through a SCADA system

• Smart Waste Management19 (Greater Hyderabad) - Mobile monitoring of more than 1,000 dustbins, 2,000 solid waste management workers

• Wi-Fi Infrastructure (New Delhi) – Wi-Fi implementation was completed in Connaught Place in central Delhi. Citywide Wi-Fi implementation is currently underway

Service Providers (SPs) have initiated investments in smart city solutions including satellite-based vehicle tracking and fuel monitoring systems, mGovernance solutions, and security solutions video surveillance. SPs are also increasingly partnering with application developers and ICT equipment vendors to create a value chain for development of digital content and services. We expect SPs to play one of the following roles in smart cities:

1. Owner – by leading / participating in a consortium which takes ownership of the end-to-end deployment and operations of the smart city

2. Operator – by managing critical components and services like NOC, Security & Survelliance

3. Enabler only – by providing telecom infrastructure and services to the city / SPV

"In 2016, we expect SPs and OTTs to invest heavily in city-wide Wi-Fi networks which will be the back-bone for smart city services. Reliance Jio is likely to roll out Wi-Fi services across 50+ cities in 2016," he said in a report.

Bharti and Vodafone are deploying Wi-Fi through a joint venture company, Firefly.

Similarly, Facebook is working with BSNL to deploy Wi-Fi in 100 areas in rural India, while Google has announced a partnership with the railways to provide hotspots in 400 railway stations by 2016.

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