To drive economy, wannabe smart cities hunt for industries

Yellow, ochre, and red houses greet you as you drive up to the hill town of Dasve, Lavasa city's first town. One hour from Pune, it is modelled on the Italian fishing village of Portofino, clustered around a harbour. There is no sea here but the backdrop of Sahyadri hills and the Warasgaon lake, along which Lavasa snakes around, make a spectacular setting. A two-kilometre promenade by the lake has many eateries. People cycle around, sip wine by the lake. Couples hold hand and stroll lazily. Visitors can opt for motorboat rides, go on a nature trail or rock climb even. But not many people live here yet.

Dasve has 3,134 apartments and villas. It has handed over possession to 637. Lavasa's economy, one of India's early smart city experiments (the master plan of the city was executed by HOK International in 2004), is largely based around tourism and education - greenfield smart cities typically target a few industries, mostly non-polluting, around which the city can thrive.

Business Today landed up in the city on a Friday when the town looked deserted. But it was impossible to find a room over the weekend. Around 30,000 people landed in the city between January 24 and 26 this year. Lavasa says it is gearing up the city's infrastructure. More towns are being built that could one day entertain two million tourists a year. The city today has four hotels - Ekaant, Fortune Select Dasve, The Waterfront Shaw and Mercure Lavasa. Three more are under construction. Universities have set up campuses. There is Christ University from Bangalore and a Swiss hotel management college, Ecole.

While financing and monetisation seems easy in a greenfield city, it has one veritable challenge. It needs to convince industries to relocate. Lavasa wants to attract IT-BPO companies in its second town but has to show them a value proposition. Andhra Pradesh wants to build a new capital city near Vijayawada covering 120 square kilometres. It has started the land acquisition process and has signed an MoU with Singapore for developing a master plan for the central business district. "We are going about integrated planning - airports, ports, road networks, the ease of doing business - all will play a role in the plan," says Sanjay Gupta, Special Secretary of Planning in the Government of Andhra Pradesh. Construction, he thinks, will be easy. But how to operate the city will be critical. "We have to bring in economic activity. It has to be either manufacturing or the knowledge economy. The challenge is getting companies to relocate to the new city," he says.

Chhattisgarh's new capital city, Naya Raipur, started construction work in 2008 and currently hosts government and educational institutions. Amit Kataria, CEO of Naya Raipur Development Authority, says he is trying to attract electronic manufacturing companies as well as IT-BPO firms to this city, which is now touted as a good example of smart energy management. Philips' LEDs light up its streets.

Manufacturing is expected to be the commercial epicentre for greenfield cities coming along the Delhi Mumbai Industrial Corridor. The corridor runs through six states - Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra. Seven cities are coming up along the Corridor and all of them are in early phases of development. "We have completed physical and digital master plan ready for five of the seven cities," says a government executive who did not want to be identified. Three cities - Shendra Bidkin in Maharashtra, Integrated Industrial Township Greater Noida and Dholera in Gujarat- are on parallel track. "In Dholera, we have completed the preliminary engineering work. The detailed design and construction tender will be out in a maximum of six months for Dholera. Our target is to float the tenders for all three projects this financial year," he adds. An implementation tender will be floated for another greenfield city, Vikram Udyogpuri, in Madhya Pradesh shortly.

"The minute we start trunk construction, land prices are going to shoot up. We will start inviting our anchor tenants," says Jagdish Salgaonkar, Senior Vice President at programme management company AECOM.

The company, in 2012, won the programme management contract for Dholera through an international competitive bidding. He is expecting defence, automobile, engineering, other manufacturing sectors and agro to be interested. "Big parcels of land - 1,000-2,000 acre - will be given to the anchor tenants. The big boys will come in first and once they come in there are thousands of small and medium enterprises who will follow."

Salgaonkar makes it sound easy. It could be much more difficult to get the big boys of Indian manufacturing to set up shop though - Dholera will compete with six other greenfield city in the corridor itself.