Several countries see opportunity in India’s Smart City initiative

Sachin Manawaria | The Dollar Business

Infrastructure development is a priority for the Indian government

  With an aim to improve the urban infrastructure and governance, the Modi-led government has embarked upon the initiative of building 100 smart cities across the country.  This could bring the second round of construction boom in the country and get investment and expertise from several countries eager to participate in the transformation. Recently, Prime Minister Narendra Modi chaired a high-level meeting on Smart City and called for identifying parameters for such cities. According to the government, such cities would be the hub of economic activity and the focus would be on green technologies. To help build new cities, the government has allowed 100% Foreign Direct Investment (FDI) in the housing and real estate sector. Hailing the move, the Associated Chamber of Commerce and Industry of India (ASSOCHAM) said that the relaxation of FDI norms in the construction sector will boost the government’s ongoing efforts in creating smart cities. Allowing 100% FDI will provide a right impetus to the capital-starved housing and real estate sector especially in Tier II & III cities, said ASSOCHAM. The new norms will result in removal of the minimum 10-hectare rule for the serviced housing plot, reduction of minimum floor area for construction projects eligible for overseas investment (from 50,000 square metres to 20,000 square metres) and also a reduction in minimum ticket size for FDI investment from $10 million to $5 million. Apart from green technologies and construction materials, Smart Cities are expected to spur demand for digital technology, automobiles, energy, healthcare and transport systems in India in the coming years. The Smart City initiative has already caught the attention of several countries such as Japan, Russia, New Zealand and countries in ASEAN. Recently, Russia said that it would participate in developing smart cities in India, while India has urged USA to increase investments in the development of Smart Cities in India, after reports in USA said that there were significant barriers to FDI in India.

 This article was published on January 6, 2015.