The Hurdles Smart Cities Must Cross Before they Reshape India's Urban Landscape

India’s Smart Cities Mission (SCM), launched in 2015, was intended to be a game-changing project to build sustainable, technology-centric urban centres. The goal was upgrading infrastructure, creating better public services and applying smart technology to city management. As per the recent announcement by the ministry of housing and urban affairs, 91% of sanctioned projects were completed by November 2024. While this is a significant achievement, there have also been several challenges that have resulted in slower execution such as land acquisition, legal issues and centralised decision-making, to name a few. To address these issues, a comprehensive strategy that encompasses policy reforms, innovative financing, technological advancements and community engagement must be deployed.

Missed Milestones

While Rs 1.64 lakh crore has been invested in the SCM project, several projects still lag behind schedule because of land acquisition issues, slow decision-making and bureaucratic inefficiencies. The parliamentary panel had earlier reported that 68 of the 100 smart cities did not meet their original targets and multiple deadlines were given to complete work. There are cities like Ludhiana and Pune, which have seen very poor execution where completed projects failed to deliver tangible benefits due to poor planning and implementation flaws.

Governance-related roadblocks are one of the most persistent challenges. Delayed responses and inefficiency due to a lack of coordination between municipal bodies, state governments and central agencies have also contributed. Small and mid-sized cities, especially those with a population of less than 5 lakh lack adequate planning capabilities and shortage of skilled manpower, and as a result find it difficult to manage and execute intricate smart city projects.

Funding is still the primary obstacle. While the mission has depended on central and state government funding, the municipal bodies have found it tough to lure private investments. These include many smart cities, which studies have shown are financially distressed with local administrations unable to repay debts accumulated to build smart cities as they have not generated adequate revenue through municipal bonds of public-private partnerships (PPP). Financial sustainability is a concern with many Integrated Command and Control Centres (ICCCs) being funded temporarily.

Harnessing Tech

The success of Smart Cities technologies in transforming urban governance depends on strategic execution. ICCCs enable real-time monitoring of city services, but their impact varies due to challenges in data integration and financial sustainability. Internet of Things (IoT)-based solutions, such as smart traffic lights and waste management systems, have improved efficiency in cities like Indore and Surat, yet high costs limit widespread adoption. Meanwhile, artificial intelligence (AI) and big data offer powerful insights for urban planning and disaster management, though many cities still lack the technical expertise and infrastructure to harness their full potential.

Some of the greatest challenges coming in the way of smart city projects are delayed execution and implementation gaps. On such great projects approved by the government, slow bureaucratic processes, a lack of technical capacity at the municipal level and delays in granting of approvals curb their speed. One of the great solutions is digital twin technology, generating real-time virtual replicas of city infrastructure, thereby enabling authorities to simulate, monitor and optimise projects even before deployment. Many international cities, Singapore being one of them, have adopted digital twins in urban planning. A report by [professional-services firm] Deloitte states that digital twins can deliver a 30% cost reduction and 50% acceleration in timelines. Hence, Indian smart cities could deploy it for transportation, utilities and public infrastructure projects to identify bottlenecks in advance, optimise resource allocation and avert costly delays.

Political and administrative bottlenecks form another major obstacle, as there is a very poor degree of inter-departmental coordination and thus the decision-making process is slow. Special purpose vehicles (SPVs) with more autonomy can be set up so that smart city projects are less burdened by political interference and get faster approvals. These SPVs have been effectively used in cities such as Bhopal and Pune, allowing for decentralised decision-making and faster execution. The development of an AI-governance platform would then help synchronise the efforts by municipal bodies, state agencies and central authorities through real-time data sharing and policy coordination.

Financial constraints and weak revenue models have also severely affected the mission's progress, with a number of smart cities finding it difficult to secure sustainable funding. Cities need to shift towards innovative financing mechanisms like land value capture (LVC) and green bonds. For instance, the use of green bonds by cities such as New York and London has been very efficient in funding urban climate-resilience projects.

Roping in the Community                        

One of the fundamental flaws in the existing smart city model is the absence of citizen engagement. The success of urban projects depends on community involvement, yet decision-making has remained largely centralised. Cities like Chennai and Bengaluru have shown that participatory governance—where local communities contribute to planning and execution—results in more effective and sustainable urban solutions. Increased transparency, regular public consultations and digital platforms for citizen feedback can bridge the gap between administration and residents.

One of the most promising solutions to overcome funding and resource challenges is fostering stronger public-private collaborations. Key areas where PPPs can drive transformation are: smart mobility private investments in metro rail and bus rapid transit system (BRTS) systems, such as the ones in Mumbai and Ahmedabad that have brought smart mobility to citizens' doorsteps, motivating private developers by incentivising them to build sustainable housing projects to bridge urban housing shortages, and partnering with technology firms to offer cutting edge as well as AI-based governance solutions, predictive analytics and smart policing for city management.

India's smart cities hold great promise, but the vision can only be realised by overcoming persistent challenges. A multi-faceted approach that includes administrative reforms, enhanced financing models, robust technological implementation and greater citizen participation is essential. By focusing on sustainability, fostering innovation and ensuring inclusive governance, India can truly build cities that are not only technologically advanced but also liveable, resilient and future-ready.

The author is managing director, southeast Asia and middle East, Green Business Certification Inc, India. Views are personal.