In India, the Central and the State Governments have worked on a wide range of sectors-including roads, ports, telecommunication, power, water supply, waste management, tourism, industrial infrastructure, SEZ, township development, and health-on a Public-Private Partnership (PPP) basis.
For successful development of a PPP framework for greenfield smart city developments, the government needs to be attuned to the key concerns and risk perceptions of private sector developers, and adopt international best practices for the development of policies and frameworks that facilitate PPP projects. Full and clear support by the government and an enabling framework are critical for the success of PPP projects. In this regard, following is desired:
a) Given that land acquisition is the most difficult part of big infrastructure projects in India, the Central and the State Governments, through its agencies, may partner with the private corporations with project land in possession to develop the greenfield smart cities on a PPP basis. Although the smart city concept is vibrant and has massive growth multiplier effect opportunity, this concept being new to the country, the chances of success are much higher if such projects are developed through PPP approach. A PPP project will instill high level of confidence among the investors, particularly global investors. The government or its agencies may exit at a suitable time, after the completion of the development and having made reasonable to significant profits, if they so desire. This will act like a win-win formula for the government as well as the private developers. Such initiative will also fulfill the agenda of the government that of bringing in large investments, decongesting highly populated Tier-1 and Tier-2 cities, bringing vibrancy to the nation and States.
b) The Central and State government agencies partnering in such PPP developments may provide equity between 11 per cent to 26 per cent or by means of allotting an adjoining land parcel if available with the government/agencies or in any other manner that is agreeable to both the parties.
c) The Central and State governments may provide absolute clarity and commitment on incentives and concessions to be offered to such PPP developments. It may consider providing off-site infrastructure, equity investment, bond issues, tax/royalty exemptions, speedy clearances from a single-window, harmonising procedures and policies, etc. as may be possible to enable a reasonable rate of return on the project, to attract large investment from across the globe and to generate maximum employment opportunities.
d) The Central and State governments may give a clear signal about its intention to meet its contractual commitments under PPP, and may ensure that there will be no shifting of goalposts after PPP is approved or after award of incentives through a transparent policy framework.
e)Effective PPP models involve sensible division of roles and fair sharing of risks between the public and private sectors.
f)In PPP greenfield smart city developments over a contiguous land parcel of 500 acres or more, the greenfield smart city developers may be appointed as the Special Planning Authority (SPA) for the operation and management of the smart city, provided such SPA has one nominee from the government as well as a representative from a global conglomerate with the requisite experience of managing smart cities.