The 100 Smart Cities Initiative, one of Prime Minister Modi’s key programs, has attracted worldwide attention from media, businesses and governments. While the concept of ‘smart cities’ is not a new one, the Indian government conceptualized the idea in the context of Prime Minister Modi’s vision for India.

According to the concept note released by the ministry, the program caters to the needs of people migrating to cities from rural areas in search of better employment opportunities. The focus is to harness the benefits of technology in infrastructure creation, transparent services and digitized service processes to make it easier to run commercial activities, attract investment and create employment. The concept note details the various aspects of a smart city and includes benchmarks for progress.

The program does not entail building 100 brand new cities. The aim is to build satellite towns near existing urban areas using the smart city template; to upgrade existing mid-sized cities; and to build settlements along industrial corridors. Apart from the smart cities program, the government is also working on a new urban renewal mission, under which 500 cities will be selected. This will replace the previous regime’s Jawaharlal Nehru National Urban renewal Mission (JNNURM). 

The previous regime focused more on urban renewal and developing the rural economy to mitigate urban migration. The current government has taken a more pro-urbanization stance, focusing its policies on promoting the development of intermediate-sized cities to ensure sustainable urbanization, under the premise that migration cannot be restricted. The Finance Minister, while allotting a seed budget of $1.14 billion to initiate the program in the last budget, said, "Unless new cities are developed to accommodate [a] burgeoning number of people, the existing cities would soon become unlivable".

The Indian government, recognizing that financing the initiative may be challenging, is determined to attract private participation. This trend of seeking to attract private sector participation to meet funding challenges can be observed across Prime Minister Modi’s key development initiatives—for example, the Swachh Bharat Mission (Clean India Mission) and Digital India campaign. 

The government has already taken steps to involve the private sector:

• The government hopes to forge partnerships through which countries adopt cities in India and work closely with those city governments. Partnerships have already been forged with Japan, China, Singapore and the US, which hava adopted cities.
• The Ministry indicated that smart cities will be developed under the public-private partnership (PPP) model. Officials recognize that the current PPP model is not appealing to the private sector, as PPPs in India often cost more and take longer to develop than expected and are less profitable than forecasted. Therefore, the government plans to undertake PPP projects in the smart cities program through a viability gap funding model. The government has also eased the land acquisition norms for urban infrastructure creation.
• Another big change is that the Indian government will encourage a user fee for public services, to enable private sector participation in infrastructure creation and maintenance in these cities.  Speaking at an industry conference, the Minister of Urban Development said, “Citizens of smart cities should be ready for reforms – willing to levy user charges, start water metering and partner with the private sector.”
• The government has eased FDI norms, allowing 100 percent FDI in affordable housing. Several other regulations may also be eased to provide incentives for the program.
• The government has engaged with various chambers of commerce, industry associations and other stakeholders on the guidelines for the program, actively seeking stakeholder input. 

The program has already attracted considerable interest. Microsoft City Next has partnered with the Surat Municipal Corporation (SMC) to develop Surat as a smart city with advanced urban planning and citizen empowerment processes. Domestic consumer durables maker Bajaj Electricals has partnered with Cisco to jointly participate in the program. Several other firms have expressed their intent to participate as well. 

The government has completed various rounds of discussions with all the stakeholders: states, cities, industry and civil society on the draft and is currently finalizing the guidelines for the program. It is also in the process of finalizing the list of cities which will take part in the program. After receiving the ministry’s approval, the respective city bodies will adopt protocols to develop individual plans and conduct open discussions for projects. The program has been rapidly activated by the Prime Minister and sources indicate that the government hopes to start operations by this financial year.