BW_SMART_CITIES_September_October_2016

IT infrastructure that connect the

city in a seamless manner.

According to an estimate by

Frost and Sullivian, the total in-

vestment opportunity in ‘100

Smart Cities’ is $774 billion. Of

this total investment, physical in-

frastructure sector alone consti-

tutes 75% ($557 billion), and re-

maining is in management,

consulting and ICT interface.

As per NASSCOM, smart cities

can create a $30-40 billion busi-

ness opportunity for the IT sector

over the next five-ten years; this is

on the assumption that about 10-

15% of the outlays on smart cities

will be for the ICT component

Apart from physical infrastruc-

ture, social infrastructure such as

smart classes, healthcare, enter-

tainment are an opportunity for

the private players.

This presents a vast opportunity

for private players, who have al-

ready expressed their interest in

the project in terms of financial

assistance and investment, devel-

opment and designing the pro-

jects, providing various services

and in management and consult-

ing. Private players like Dassault

Systems, IBM, Cisco, GE, Schnei-

der Electric, Bosch, Microsoft are

already participating in the pro-

gramme. Also various interna-

tional agencies like the JICA( Jap-

anese International Cooperation

Agency), World Bank and IFC, 14

countries have shown an interest

in partnering India in funding the

Smart Cities Mission. These play-

ers are expected to offer their ex-

pertise through products and so-

lutions ranging from smart

lighting to waste management to

smart mobility programme. Such

partnerships could potentially

outfit these cities with smart tech-

nology capabilities and will help

offset pressure on the government

to bring in the incremental reve-

nue necessary to help financing

these cities.

Challenges

However the industry players have

already raised their doubts on the

existing PPP model in India. In

various infrastructure projects the

actual financial closure and com-

pletion rate of such projects is very

low and has not always worked

well. These models need to be

critically analysed and modified

by the government.

According to Michael S Burke,

global Chairman and Chief Execu-

tive Officer, AECOM: “There is

never going to be enough public

money to satisfy all transportation

and infrastructure challenges.

There are various other models in-

cluding public private partner-

ships. These models have to be

analysed and explored. Not all

PPP models worked. Some of the

PPP did well, some did not”.

Burke said that he is already

looking at financing some of the

projects, however the model needs

to be financially viable.

AECOM is working on nine ma-

jor metro systems, 6,000 km of

road projects, 3,500 km of rail

line, 10 ports and has already

bagged Smart City projects of Lu-

dhiana and Vizag.

The lengthy procurement pro-

cess and project clearance is one of

the main challenges. There are

multiple levels of project clear-

ance due to which the cost of pro-

jects increases manifold. Moreo-

ver, the private sector wants

confidence from the government

that policies will not change mid-

way and are seeking room for flex-

ibility in the terms of agreement,

while a project is in progress.

Another area of concern is the

proposition must be attractive for

the private players. In most of the

infrastructure projects, financial

closure is a challenge. Banks have

15

Per cent of the outlays in

the smart cities project

will be used for the ICT

component

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