This article has been written by Shruti Jain pursuing Certificate Course in Real Estate Laws and has been edited by Oishika Banerji (Team Lawsikho). 

This article has been published by Sneha Mahawar.​​ 


The basic components for every city are land, people, government, and infrastructure. What differentiates a conventional city from a smart city is better planning and better advancement in these four components, in terms of technology and infusion of artificial intelligence (AI) in these components. Earlier conventional cities were a common sight, but with the evolution of internet technology as well as the proactiveness of the Government of India in terms of digital and information technologies, urban planning best practices, public-private partnerships, and policy change, more and more conventional cities are turning into smart cities. A prime example of such a city in India is Indore in Madhya Pradesh.  The importance of smart cities is huge and particularly in the light of the real estate industry, its importance cannot be exaggerated. In this article, we would be looking after the concept of smart cities and also the role it plays in the real estate industry in India.

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All you need to know about smart cities

Smart cities are defined as cities based around efficiency in terms of infrastructure, urban planning, employment opportunities, better environment and the latest information technology systems. Smart cities focus on the best opportunities to improve the lives of the people living in that particular city or town. 

Smart cities are considered to be greener, safer, faster, and friendlier in comparison to traditional cities. The different components of a smart city can range from smart infrastructure, transportation, health care to that of smart energy sources and usage of smart technology. It is these components that contribute in addition to the term ‘smart’ before the age-old term ‘cities’ thereby making it more efficient and equipped as well. Information and communication technology (ICT) are considered to be the enabling keys for carrying out the transformation of traditional cities to that of smart cities. The two familiarly known ICT that are developing to aid smart cities are the Internet of Things (IoT) and big data (BD), which are also responsible for adding the traits of efficiency and responsiveness to the feather of smart cities. With growing maturity in these technologies, smart cities are being given rooms to emerge and grow in today’s changing times. Although powered by technology, smart cities ideally cannot be termed to be perfect as development in terms of physical infrastructure, putting digital technologies to public services, addressing city problems and living conditions of people, affordability and better utilisation of available resources, are required and still in progress.

Government initiatives in development of smart cities in India

Time and again, the Indian government has been taking initiatives to improve the quality of life of its people and towards the overall growth and development of the country. One such step towards the same was taken in the form of the Smart City Mission which was launched by Prime Minister Narendra Modi in India on June 25, 2015. India had planned 100 smart cities and to develop modern satellite towns around the existing cities. The overall funding allotted to the mission was Rs 7,20,000 crore in budget 2014-2015.

Strategy behind Smart Cities Mission 

The Smart City Mission was formulated to develop areas step by step on the basis of three area-based models which are:

  1. Retrofitting which means city improvement.
  2. Redevelopment which means city renewal.
  3. Greenfield which means city expansion.

The prime features of this scheme comprises of:

  1. The use of mixed land according to its per-area usage plan;
  2. Adequate housing choices to everyone especially the poor;
  3. To reduce congestion, ensure security, reduce air pollution and promote interaction and local economy;
  4. Efficient urban mobility and public transport;
  5. Good governance, especially e-Governance and citizen participation;
  6. Sustainable environment;
  7. Health and education.

The current scenario of this mission have been elaborated hereunder: 

  1. Initially, the mission was planned to cover 100 cities in the duration of five years (FY 2015-16 to FY 2019-20) but currently, its period of implementation has been extended to June 2023 and this makes 2023 one of the most significant years for the development of smart cities in India. As on December 2, 2022, the government had released Rs 34,675 crore of which Rs 30,418 crore (88 percent) has been utilised. Work orders have been issued in 7,738 projects worth Rs 1,81,112 crore of which 4,987 projects worth Rs 92,439 crore have been completed.
  2. The Mission has so far covered over 140 public-private partnerships, 340 ‘smart roads’, 78 ‘vibrant public places’, 118 ‘smart water’ projects and over 63 solar projects.

Other schemes linked with the Smart City Mission

  1. Atal Mission for Rejuvenation and Urban Transformation (AMRUT):

Atal Mission for Rejuvenation and Urban Transformation (AMRUT) was introduced in June 2015 by PM Narendra Modi under the Government of India initiative. The AMRUT scheme is a progressive step towards a better tomorrow involving the adoption of fundamental civic amenities to urban areas thereby improving the quality of living and throwing focus towards the disadvantaged to promote holistic growth. Considered to be the first focused national water mission, AMRUT has launched itself in 500 cities and has covered over 60% of the urban population.

  1. Heritage City Development and Augmentation Yojana (HRIDYA):

HRIDYA offers an immense room filled with integrated, inclusive and sustainable development of certain heritage in India. HRIDAY was introduced to offer a change in the adopted approach for the development of cities thereby bringing together urban planning and conservation of heritage. The new approach is inclusive in nature and promotes focusing on livelihoods, skills, cleanliness, security, delivery of services and accessibility, in an integrated manner. 

  1. Digital India:

Digital India is considered to be a flagship campaign launched by the Government of India in order to ensure the availability of government services to citizens in electronic mode. To avoid rising distance between the government and the citizens and to focus on inclusive growth, the government through this initiative has been working on developing efficient online infrastructure, increase internet connectivity thereby making India a digitally empowered nation. 

  1. Make in India:

The “Make in India” initiative has been made up on four pillars, that are recognised as catalysts to the development of entrepreneurship in India, not only in terms of manufacturing but also in other sectors. ‘Make in India’ has been promoting ‘ease of doing business’ as the sole factor to promote entrepreneurship

  1. Pradhan Mantri Awas Yojana:

Pradhan Mantri Awas Yojana – Urban (PMAY-U) is considered to be a flagship initiative by the Indian government of India that has been implemented by the Ministry of Housing and Urban Affairs (MoHUA) and was launched on 25th June 2015. The purpose of this is to address the urban housing shortage among the EWS/LIG and MIG categories, which is also inclusive of slum dwellers, thereby ensuring a pucca house to all eligible households by the year 2022. 

  1. Swach Bharat Abhiyan:

The Swachh Bharat Mission was launched by the Union government on 2nd October 2014 with an aim to speed up the cleaning mission thereby accelerating waste management in the country. Under this mission, all villages, Gram Panchayats, Districts, States and Union Territories in India were declared “open-defecation free” (ODF) by 2 October 2019, which also marked the 150th birth anniversary of Mahatma Gandhi. In honour of the event, 100 million toilets were constructed in rural India. 

Role of smart cities in the real estate industry

The link that exists between the planning of a smart city and the dynamics of the real estate sector is huge. The government’s agenda of building 100 smart cities together with the ease in taking loans from banks and non-banking financial companies for development projects has played a major role in making a real estate boom in Tier II and III cities. Since smart cities offer a promising long-term solution for the Indian real estate sector and urban centres have been expanded to Tier II and Tier III cities, it would be interesting to understand the impact that smart cities have on real estate sector in the manner mentioned below:

Increased demand for commercial real estate

Since smart cities result in the pitching of companies having worldwide coverage and having international outreach, this has led to the need for more office spaces. A lot of investment from this sector has been attracted as more and more cities are smart, and because of the same, the demand for office spaces has risen high.

Increased demand for residential real estate

As a city goes smart, a lot of potential investment and businesses are attracted to it which in turn makes more people to relocate to smart cities from rural areas for better career opportunities and an improved lifestyle.All of this has added up to a thriving real estate market for residential properties.

More job opportunities

With a boom in the overall commercial and residential real estate sector and also with the need of more and more raw material needed to develop these smart cities, multitudes of job openings for the people in smart cities has ultimately opened up, which has called for improved infrastructure and an overall rise in the standard of living in such cities. 

By way of this, the job openings in the real estate sector have risen very high as more manpower and labour are now needed to cater to infrastructure development in smart cities.

Magnified private-public partnerships

The amount deployed by the government for the Smart Cities Mission accomplishment is in no way a small amount. However, the funding requirements for smart cities is definitely way more which entails for the contribution from the end of the private sector in the form of public-private partnership projects as central, state or local funding will just not suffice. 

The huge capital required to build smart cities has seen stronger partnerships between the public and private sectors. Such collaborations have resulted in the efficient delivery of services and utilities to people residing in smart cities. This can certainly be the Indirect way of pooling of capital by developers and private enterprises for creating joint ventures within smart cities.

Improved infrastructure and standard of living

With the technology coming in, infrastructure has improved as residential and commercial spaces are driven by the technology in smart cities. Eventually, better infrastructure has led to a better standard of living as real estate within those cities has become some of the most attractive properties in the industry. 

Less operating costs

Smart cities are well equipped with modern technologies in terms of city planning and its mode of operations. With such benefits, cities are able to invest funds elsewhere in the community and not necessarily have to channelise funds for capital development.

The Smart City Mission will definitely continue to result in the reduction of corruption as it is well aligned with RERA and therefore lead to the energised real estate market. 

Future of smart cities in India

It is ideal to state that there lies no future talks about smart cities in India as it is our present. A city is nothing but a system of different systems, placed in a specific social and environmental context. For any kind of city to prosper, key city systems need to work simultaneously with harmony thereby focusing on minimal wastage of available resources. When we call a city to be smart, we ideally describe it as being efficient to eliminate wastage of any of its components. Thus, the future lies in the hands of smart cities as the only thing we currently lack is a governance system that will aid the smart cities to function lawfully without affecting the welfare of its residents. Smart cities represent long-term sustainability because it is an idea that focuses on minimal representations and operation cost. Thus, to positively state, the need for smart cities has been on a rise from day by day with the increase of population as the available earthly resources are limited.


No matter how smart the city, a high-quality infrastructure built out is needed to support it all. The government’s mission of building 100 smart cities has already been doing well and uptill now 5,002 projects out of 7,742 projects have been successfully completed.  As more smart cities come up, the Indian real estate industry will definitely transform for the better and however, while quality infrastructure & technology no doubt comes at a price, the economic benefits of a smart city certainly outweigh the incremental costs.


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