Interview Mr Kunal Kumar: India’s Smart Cities Mission, perspective for French companies

Aurélien Sostaponti - 31/05/19

BUSINESS FRANCE IN INDIA India’s Smart Cities Mission Perspectives for French companies on the occasion of Ambition India 2019 – Business France Replies by: Mr Kunal Kumar Joint Secretary (Mission Director – Smart Cities), Ministry of Housing and Urban Affairs (MoHUA), Government of India

Q1. Could you please provide a brief introduction of India’s Smart Cities Mission (SC Mission)?

India’s Smart Cities Mission was launched by the Prime Minister Shri Narendra Modi on June 25, 2015.

The main objective is to promote cities that provide holistic and integrated infrastructure and a great quality of life to their citizens while maintaining a clean and sustainable environment. The focus is on sustainable and inclusive development and idea is to look at compact areas, create replicable models which will act like lighthouses to other aspiring cities. The process of selection of 100 smart cities was based on the principle of Cooperative and competitive federalism —all cities were given equal opportunity to enter through All India Challenge conducted in four rounds. The cities competed in a two-stage challenge process at the State and Central level. Key features of this process were Citizen Engagement and City Empowerment where cities were encouraged to decide their aspirations and execute them with support from Central and State Government. Integration, innovation and sustainability are guiding principles of the Smart Cities implemented through provision of integrated infrastructure and services, promoting circular economy and sustainable habitats, reimagining paradigms of governance and spurring innovation in delivery of solutions.

Technology is one of the many instruments that smart cities are adopting to solve urban challenges. Inclusiveness is built into the mission to ensure that each and every citizen benefits from the urban transformation that is taking place in the smart cities. Each Smart City has formulated its own concept, vision, mission and plan (Smart City Proposal--SCP) which is appropriate to its local context, resources and level of ambition. Every SCP includes core-infrastructure elements such as assured water supply, electricity supply, sanitation and solid waste management, efficient mobility and public transport, affordable housing, safety and security, health and education. Smart Solutions in SCP include a bouquet of services that ensure that service delivery levels are achieved and measured, citizen services are seamlessly delivered, grievances are timely registered and resolved and safety is increased through video surveillance and monitoring.

Q2. Please share some highlights of the progress of the Smart Cities Mission since its launch in 2016?

Since the launch of the mission in June 2015, the work has progressed at a brisk pace. 100 cities were selected over a period spanning from January 2016 to June 2018. Post selection, each city has incorporated an SPV or Special Purpose Vehicle, with dedicated management and organisation structure to drive the project implementation and other initiatives of the mission. The SPV has appointed the project management consultant (PMC) that will support the SPV in planning, design and implementation of the projects. The projects can be broadly categorised into four themes :

• Ease of Living - urban mobility, affordable housing, water and sanitation, safety and security, vibrant open spaces

• Smart Governance – Integrated Command and Control Centres, Smart Card, Online Services, Intelligent Traffic Management System, Smart Poles

• Connected Communities – Smart Education/ Classrooms, Skill Development, Public Art, Built Heritage

• Urban Resilience – Solar and Wind Energy, Waste to Energy Plants, Green Buildings, Energy Management The 100 smart cities have proposed to execute 5 151 projects worth € 26.65 billion (INR 2 05 018 crores) in 5 years from their respective dates of selection. Financial innovation is built in the design of their capital investment plans. 64 % of the total projects i.e. 3492 projects, worth € 17.16 billion (INR 1 32 068 crore) have been tendered in SCM of which work orders have been issued in 41 % i.e. 2745 projects worth € 11.32 billion (INR 87 131 crore). 860 projects worth € 1.88 billion (INR 14 465 crore) have been completed. This is a significant increase in pace of implementation—289 % increase in tendered projects and 358 % in implementation/completed in last 16 months! Mission Cities have successfully expedited work on key projects which include: Integrated Command and Control Centers (ICCC) in 71 cities with operational in 16 cities; Smart streets projects in 69 cities; Smart Solar energy projects in 47 cities; Smart Water management projects in 67 cities; Smart Waste Water management projects in 56 cities. Projects are being executed through Public Private Partnerships in 61 cities.

Q3. With regards to the Indo-French cooperation on Smart Cities, what views would you like to share?

The relationship between India and France dates back to several decades and has been scaling heights in recent years. Indian Prime Minister paid a landmark visit to France from 09-12 April 2015. Former French President Hollande paid State visit to India during 24-26 January 2016 and was our chief guest for India’s Republic Day celebration. Our Prime Ministers have been meeting regularly on different platforms. The scale of cooperation between the two countries may be understood from the fact that almost 1000 French companies are present in India with a total turnover of more than € 17.8 billion (20 Billion USD). French companies have; the third largest FDI inflow, 25 R&D centres in India and employed around 300 000 people in India. On the other side, 120 Indian companies operating in France with an estimated investment stock of 1 billion Euros and employing around 7000 people. With regard to the Smart City Mission in India, France and India are collaborating on a very interesting project, City Investments to Innovate, Integrate and Sustain (CITIIS) Challenge.

CITIIS was launched on 9th July 2018 by the Smart Cities Mission, Ministry of Housing and Urban Affairs in partnership with Agence Française de Développement (AFD), European Union (EU) and National Institute of Urban Affairs (NIUA). The program, the total size of which was € 100 Million, was open to all the 100 smart cities During the Challenge process for selection of projects under CITIIS, 36 Smart cities submitted a total of 67 proposals belonging to various themes. Of these, 13 projects from 13 cities and 12 States were selected for award by a distinguished jury comprising of nine experts from India and France. MoUs have also been signed between AFD (French Development Agency) and UT of Chandigarh, Puducherry and State Government of Maharashtra for development of Chandigarh, Puducherry and Nagpur. (Support for preparation of SCPs and implementation of projects) As part of urban transport improvement initiatives in India, financial assistance to various Metro projects were provided by AFD such as Bangalore Metro (€100 million - Phase 1, € 200 million -Phase 2), Kochi Metro (€ 180 million) and Nagpur metro. With regard to technical collaboration, technical support was provided to various Metro projects such as signaling system in Bangalore Metro, telecommunication and power & traction in Kochi Metro etc.

The two countries have been working together in several fields ranging from civil nuclear cooperation, defense, and space to cultural, scientific and technological areas, including cybersecurity and digital cooperation. I would like to see this cooperation grow in the areas of urban development and combating climate change.

Q4. In terms of projects, kindly elaborate the type of projects for which international companies can be useful to India’s Smart Cities Mission.

I would like to see international industry actively participating in India’s urban sector via one or more of the following three tracks: 1) Providing technical support/capacity building support to cities/design and execution professionals already working in India; 2) Undertaking projects design and implementation of projects through competitive bidding/consortium building; and 3) Bringing in investment to Indian projects. Some areas we would like their participation in are: • Smart energy systems, net zero cities/precincts

• Urban design of complete streets Reviving local economies

• Increase on disaster resilient cities and communities

• Urban Mobility and Transit Oriented Development (TOD)

• Design of cities promoting circular economy; water and waste management Design of accessible urban spaces for the old and the people with disabilities

Q5. Could you help us understand what are and will be the different types of preferred tendering processes to be used for projects under the Smart Cities Mission?

We do not prescribe any particular tendering process to be used for projects under the Smart Cities Mission. The smart city SPV has the authority to carry out the tendering process for all projects. The tendering process is often guided by the procurement rules prescribed by the state governments. The state governments have their own procurement rules, procurement manual and in some instances standard documents to be followed by the state agencies. The city SPV undertakes a project development phase for individual projects that includes preparation of the feasibility study and/or Detailed Project Report (DPR). The tendering of the projects is done after the approval of the feasibility study/DPR. The tenders are published widely to maximise participation. Most of the tenders are evaluated both on cost and quality; lifecycle costs are taken into consideration for long gestation projects. Level playing field is made available so that the best companies can participate. Their participation has been one of the highlights of the Mission. Not only the best Indian companies, but renowned international companies have participated and are successfully executing projects in various cities.

Q6. Can you elaborate what is the emphasis given, under the SC Mission to 3 sectors: mobility (urban transportation), water-waste management and connectedness of services for citizens?

The Smart City Mission in India is envisioned as an urban rejuvenation initiative encompassing holistic development of urban areas including, but not limiting to, smart command and control centre, smart roads, smart solar, smart waste water and smart water projects. The three sectors with regard to mobility (urban transportation), water-waste management and connectedness of services for citizens are an integral part of the Mission and have been central to its objectives.Mobility (urban transportation): Smart transportation leverages smart infrastructure that includes multi-modal connected conveyance, automated traffic signals, tolls and fare collection, data integration—incorporating weather and traffic data, linking emergency services data as well as information from government agencies— drives the system. A central command centre ties together the smart transportation ecosystem, with real-time and updated data, handling passenger information, traffic signals, incident management and vehicle health monitoring. Optimized ‘on-demand services’ ensure that citizens can use all modes of transport according to their needs.

Shared mobility solutions help provide first and last mile connectivity in conjunction with public transportation, they can act as feeder services and improve access to metro/rail or bus services. We are aiming to make public transportation robust and accessible through multi-modal shared mobility, so that citizens can choose it for all their commuting needs be it travel for work, travel for daily needs or for leisure. This can help move people away from private vehicles, which can contribute to lowering congestion and pollution. Cities under the Mission, are using technology to develop such seamless and connected transportation systems. Technology driven smart public transportation offers more attractive, reliable, convenient and complete choice of mode to commute. This reduces dependency on cars, arrests urban sprawl, and enables city authorities to develop compact cities with more focus on moving people rather moving cars. Lesser cars on roads will also reduce city’s air pollution levels. Moreover, with the continuous advancement in development of electric vehicles, smart transportation is destined to transform cities to zero emission mobility smart cities. In the Mission cities till date, total of 734 smart transportation projects worth € 3.64 billion (INR 28000 crore) are under implementation/completed. Electric mobility projects worth € 0.08 billion (INR 601 crore) are under implementation/completed in 21 cities. Public transport operations and traffic management are integral part of all ICCC enabled cities. Smart streets worth € 0.67 billion (INR 5146 crore) are under implementation/completed in 35 cities. I would like to mention that this is just the tip of the iceberg and many more such projects are being conceived across the country as I pen this down. Water and Waste Management: Under Smart Cities Mission various initiatives are undertaken for improving water systems in smart cities. These projects include installation of smart water meters, providing house service connections, upgradation of water supply systems, interlinking of water network data with SCADA system etc.

The aim is to upgrade the existing water supply systems to 24X7 water supply systems. A total of 315 projects with estimated cost € 2.96 billion (INR 22 817 crore) are at various stages of implementation across the Mission. Of these, 35 projects worth € 0.16 billion (INR 1218 crore) have been completed, 126 projects worth € 1.32 billion (INR 10 119 crore) are under implementation and 45 projects worth € 0.57 billion (INR 4391 crore) are under tendering stage. Several initiatives with regard to waste management are also being implemented under this mission. These projects include waste to energy plants, waste to compost plants, waste water treatment plants, recycling and reduction of construction and demolition waste etc. A total of 323 waste management projects with estimated cost € 1.96 billion (INR 15 116 crore) are at various stages of implementation across the Mission. Of these, 90 projects worth € 0.19 billion (INR 1456 crore) have been completed, 177 projects worth € 1.32 billion (INR 10 182 crore) are under implementation and the rest 56 projects worth € 0.45 billion (INR 3478 crore) are under tendering stage. Regarding waste to energy plant, a total of 18 projects worth € 0.31 billion (INR 2401 crore) in 17 smart cities are at various stages of implementation. Of these, 4 projects worth € 0.026 billion (INR 202 crore) have been completed, 6 projects worth € 0.23 billion (INR 1790 crore) are under implementation and 2 projects worth € 0.043 billion (INR 338 crore) are under tendering stage. As mentioned in the case of mobility, there are many more projects than the ones which have found mention here, and hence the amount of work that remains to be taken up is clearly very large. Connectedness of Services for Citizens: Smart Cities leverage ICT based technologies and digitalisation to make governance citizen-friendly and cost effective, bring about accountability and transparency, provide services without having to go to municipal offices, form e-groups to listen to people and obtain feedback, and use online monitoring of programs and activities with the aid of online tools. In line with this, Integrated Command and Control Centres (ICCC) are being built by many smart cities to help cities in better urban planning and management. ICCCs function as single source of information and point of resolution of the civic functions of the city. They are bringing transparency through information sharing, a step towards becoming an inclusive city. Some of the ways an ICCC will impact citizens’ lives are:

• Improved decision making for (local and other levels of) governments

• Improved environmental sustainability and climate change outcomes.

• Improved quality of services to citizens

• Safety of citizens

• Making cities more inclusive A total 71 out of 100 smart cities have started work on ICCC as one of its projects under the Mission. Till date, 16 Smart Cities have operationalised ICCCs worth € 0.38 billion (INR 2927 crore), work is in progress in another 44 cities worth € 0.54 billion (INR 4170 crore) and remaining 11 cities have their projects under tendering.

Q7. Regarding the finances of the projects under the SC Mission, what is the extent of the available government funding and to what extent is the PPP and the private funding expected?

The Mission encompasses 100 cities which have proposed to execute 5151 projects worth € 26.65 billion (INR 2 05 018 crores) in 5 years from their respective dates of selection. innovation is built in the design of their capital investment plans. The distribution of funding envisaged from different sources is as follows:

• Central and State government: € 12.16 billion (INR 93 553 crore) (45%),

• Convergence : € 5.46 billion (INR 42,028 crore) (21%),

• Funds from PPP : € 5.33 billion (INR 41,022 crore) (21%),

• Loans/Debt : € 1.27 billion (INR 9,843 crore) (4%),

• Own sources : € 0.34 billion (INR 2,644 crore) (1%), Other sources: € 2.07 billion (INR 15 930 crore) (8%).

Q8. Several foreign investors have remarked that most ULBs are not financially selfsustainable and tariff levels fixed by the ULBs for providing services often do not mirror the cost of supplying the same. Could you please share your opinion in this regard with us?

I ascribe to the idea of ‘Think Global, Act Local’. While most development takes place at city level, they have to be mindful of the impact of their actions on the planet. To achieve that we must empower our cities to not only act but also think, analyse and take decisions. Having said that, cities need to become autonomous in terms of meeting their financial and other resource needs for infrastructure development, and day to day management. Lack of adequate infrastructure adversely affects a city’s ability to attract investment, and hence economic sustainability. Most of the ULBs lack in mobilization of resources and financial autonomy. The total revenues of all Urban Local Bodies (ULBs) in India merely amounts to about 1% of India’s GDP. The resource base of ULBs typically consists of their own sources, state revenue, government grant, loans from state governments, and market borrowings. They are sometimes not aware of the opportunities and avenues of generating revenues through taxes and non-tax charges. Even if they are aware, they do not have the skill to optimize tax collection. ULBs in India, therefore, have a minimal revenue base and largely dependent on Central and State grants, which constrains the ability of ULBs to invest adequately in capital expenditure like creating infrastructure and, thereby, improve quality of life in the city. Strengthening capacities of ULBs is necessary for effective resource mobilization. Their financial capacity is often restricted not only by low tax base but also low capacity for mobilization of existing resources, as result of which the ULBs are not able to harness property tax as per their potential due to undervaluation; non-availability of database of properties; low rates; low collection efficiency and lack of indexation of property values. We do realise financial self-sufficiency of the ULBs is an absolute must. Steps are being taken at all levels to empower ULBs to become self-sufficient. While the Constitution of India envisaged a two-tier system of federation, the 74th Constitutional Amendment Act, 1992 added third tier of government viz. urban local bodies. The amendment aimed at devolution of functions, finances and functionaries to ULBs. We, at the Ministry encourage cities to raise funds through municipal bonds, review of property tax system to improve efficiency and transparency in collection and mobilization of resources. Only in the last couple of years we have started to see a renewed vigour from Indian cities in raising money from the market through the instrument of Muni bonds. Several new initiatives for financial innovation are also being attempted and are showing encouraging signs of transformation. We are working on Capacity building of local government leaders such as Commissioners in :

• financial management, preparation of financial statements for increased efficiency

• improving the quality of service delivery which is the cornerstone for effective and sustainable urbanisation

• exploring innovative/alternative sources of revenue generation at the municipalities level such as PPP, Municipal bonds, venture capital financing, crowd source financing, entertainment tax, mobile towers, user charges for solid waste, water, parking, value capture financing, etc.

• enhancing citizen participation, e-governance tools like on-line procurement, tenders, and online expenditure reports. I am sure with all the efforts Government is making in this direction, local governments will soon be in a better position than they were a few years ago.

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Infrastructure, Transport and Industry (Industries and Cleantech) The Industries and Cleantech Department assists French companies in their international development strategy and promotes trade between France and India. In order to maximize commercial opportunities between French and Indian companies, the Department organises French Pavilions at a number of key exhibitions in India, as well as offering other B2B networking events and individual partnering services. The key focus of the department are the urban development (“100 smart cities”), the clean technologies (Renewables Energies, Energy efficiency…) and the industry (automotive, aeronautics, railways…). The Department provides expertise in : • Transportation (automotive, railway, aeronautics, naval, ITS) • Infrastructures (roads, airports, ports, etc.) • Energy  (Nuclear, Renewable Energy, T&D, O&G) • Cleantech (water and waste management)  &nbs

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