Greening India's smart cities: From budgetary intent to scalable impact

Economic Times

2 days ago

TIL Creatives
Urban India already drives over 60% of the country's GDP, despite occupying just 3% of its land. By 2036, nearly 600 million Indians—close to 40% of population—will call cities home.
The recent announcement of the Urban Challenge Fund in the Union Budget marks a pivotal shift in India's urban development strategy. By positioning 'Cities as Growth Hubs' and enabling 'Creative Redevelopment', the initiative reflects growing recognition that India's economic future, climate resilience, and overall livability will be shaped by our cities.
Urban India already drives over 60% of the country's GDP, despite occupying just 3% of its land. By 2036, nearly 600 million Indians—close to 40% of population—will call cities home. The pace of urbanisation is not just rapid; it is transformative. In six years, annual housing completions in the top seven cities more than doubled, from 2.5 lakh units in 2018 to 5.3 lakh in 2024. Yet, demand for homes and infrastructure continues to rise, reflected in steep housing prices that have jumped from ₹5,500 to over ₹7,000 per square foot.
But beneath this growth story lies a more sobering reality. As our cities expand to meet economic needs, they are also becoming fragile. Indian cities are warming 37% faster than the national average and are increasingly vulnerable to climate stress. The question is no longer how much we build—but how well. The future of India's urban transformation depends on how we plan, construct, and operate cities sustainably and inclusively.
Early wins hint at India's green city potential
Encouragingly, green urbanism is no longer peripheral. A combination of progressive state policies and shifting consumer preferences is beginning to reshape the development landscape. States have long offered supply-side incentives to developers—such as additional Floor Area Ratio (FAR) for green projects or fast-track approvals that shorten timelines by up to 20%. What's newer—and critical—is the emergence of demand-side measures. States like Maharashtra now incentivise homeowners directly, offering graded property tax rebates of up to 10% for buyers of platinum-rated green homes, with smaller rebates for gold and silver-rated buildings. This nudge is timely, as less than 10% of India's residential stock is green certified. Developers are also stepping up. Leading players are aligning with net-zero goals, not just in principle but through action. Lodha Group, for instance, has cut Scope 1 and 2 carbon emissions by over 80%.
Yet, green urbanism is still the exception, not the norm
For all the progress, India's urban form still reflects legacy models—car-centric layouts, unplanned sprawl, and reactive infrastructure. Many indicators remain below global benchmarks. In Delhi, India's largest public transit network serves only 18% of residents within a 500-metre radius of a station. Nationwide, over two-thirds of urban settlements lack formal master plans. Where plans exist, they often overlook peri-urban growth and climate risks. 40% of sanctioned urban planning posts remain unfilled.
A few cities are breaking this mold. Surat, for instance, has adopted a regional plan, linking surrounding towns into a cohesive spatial and economic framework. But such examples remain rare.Globally, cities like Paris and Shanghai are embracing 15-minute city models—where daily needs are within walking distance. These approaches integrate nature-based planning and efficient infrastructure to boost livability and reduce emissions. Indian cities can adapt such models, especially in fast-growing fringes.The construction phase also needs attention. On-site emissions are largely unmonitored. Prefabricated and modular construction can reduce material waste by up to 50%. Electrifying on-site machinery, deploying low-cost sensors to monitor emissions, and shifting to renewable power sources are practical steps. Procurement norms can be updated to favor low-embodied-carbon materials. However, systemic barriers remain—such as fragmented value chains, limited awareness. Addressing these requires coordination—from updating contracting models to enabling innovation and improving transparency. Globally, cities are moving: Amsterdam will mandate 20% biobased homes by 2025, cutting emissions by 220,000 tonnes annually.Lastly, but most importantly, is the operations phase of buildings. Operational energy use contributes nearly 70% of total emissions over a building's lifetime. Addressing this segment is critical. Smart systems can significantly improve performance. From self-regulating HVAC and lighting to IoT-enabled energy tracking, these tools are already available. Passive features—natural ventilation, optimal insulation, and daylighting—can reduce reliance on mechanical systems. Upgrading to energy-efficient appliances and pumps offers both emissions and lifecycle cost savings. 'The Edge' in Amsterdam, often called the world's greenest office, uses 28,000 sensors, solar energy, and smart controls to generate more energy than it consumes.
From pilots to playbooks: what needs to change
The solutions are known. What's needed now is scale. India must move from pilot projects to a playbook for systemic transformation. That shift requires action across three fronts. Governments must adopt a whole-systems lens—aligning policies, funding, and institutional capacity toward green urbanism. Proven interventions should be scaled, and urban planning recruitment must be prioritised. Secondly, real estate developers also have a critical role to play in shaping climate-resilient, people-centric assets. This includes moving beyond isolated projects to building integrated, mixed-use communities—such as 15-minute neighbourhoods. Green development should be viewed not as a compliance requirement or CSR initiative, but as a strategic business opportunity like rental premium and operational cost savings. Lastly, citizens, too, have a role. By demanding access to public transit, green spaces, and efficient homes, they can influence policy and market behavior. The bottom line: India's urban shift is rapid, with growing focus on climate-smart planning and green construction. Scaling impact now needs strong policy, institutional capacity, and real implementation across the real estate value chain.
The writers are Neetu Vasanta, India Leader - Travel, Cities & Infrastructure, BCG and Yashi Tandon, Lead Knowledge Analyst, BCG.