New Delhi
On any given day, an Indian city is dysfunctional in a myriad of ways – traffic signals that don’t adapt to real-time flow, drains that overflow after the slightest rain, or buses that either don’t run fast enough or fail to arrive on time. These are not mere engineering failures, but failures of systems that are struggling to adapt, learn, and respond to increasing urban pressures.
Ahmedabad is now trying to change this.
In a move that marks a significant change in the way technology is procured and deployed in Indian cities, the Ahmedabad Municipal Corporation (AMC) last month launched the ‘Ahmedabad Innovation and Startup Policy 2026’. The policy seeks to convert the city’s civic infrastructure – including its Bus Rapid Transit System (BRTS) corridors, CCTV networks and utility systems – into a “living laboratory” for startups, with an annual allocation of Rs. ₹Rs 50 crore to fund pilot projects.
This signals a departure from the municipal corporation’s traditional role as a buyer of technology toward a more collaborative, enabling model – one that allows startups to test, refine, and scale solutions on real city systems. Importantly, it addresses long-standing constraints in the traditional tender system of procurement by offering a Right of First Refusal (ROFR) mechanism for successful pilots as well as relaxations for startups including exemption from prior experience, turnover requirements and many other tender conditions.
As stated in the policy document, the vision is to “make Ahmedabad a sandbox of ideas and innovations for urban governance, where startups and innovators can nurture, develop, test and prove their solutions on the city’s infrastructure…”
“As a city, we believe old ideas have done their job. We need new thinking, and our youth have plenty of it. This policy will encourage startups to come up with solutions that solve local problems and have the potential to scale up,” says AMC Commissioner Banchanidhi Pani.
“Ahmedabad’s challenges are different from those of Mumbai or Delhi, so there is no point in importing standard solutions. We need to develop them within the city. Startups and local governments are naturally linked, as both focus on solving local problems. We are creating strong incentives for innovation and will work closely with startups. In this sense, the corporation sees itself as a co-creator of customized solutions,” he says.
This bold new policy comes at a time when India’s cities are grappling with several systemic challenges. Experts say stringent procurement norms under the General Financial Rules (GFR) and state laws have favored large contractors, thereby sidelining agile startups capable of addressing hyper-local problems.
AK Jain, former commissioner (planning), Delhi Development Authority (DDA), says such policies are important because many government engineers and architects are not keeping pace with the changing times. “Many of them have been in service for 30-40 years and are stuck in the old way of working. There is often hesitation in adopting new ideas and technologies. Cities clearly need young talent who can bring fresh perspectives,” he says.
Vivek Aggarwal, country director for India at the Tony Blair Institute for Global Change, says the issue goes deeper than procurement. “Technology adoption in Indian cities has been limited because there is no institutional host capable of developing pilots into scalable solutions,” he says. “For years, we have equated transformation with building physical infrastructure. Now Ahmedabad has done something more fundamental – it creates the policy infrastructure for innovation through procurement reforms, IP protection and incentive structures that allow solutions to be tested and scaled up.”
old tender secret
For decades, Indian municipalities have been operating under a tender-driven system that demands high minimum turnover (often ₹50 lakh to several crores), prior government project experience, and adequate earnest money or tender fee.
An analysis of public procurement 2025 by policy consultancy firm Primus Partners shows that stringent eligibility criteria such as minimum turnover, prior government experience and work completion certificate continue to hinder MSME and startup participation in the pre-qualification stage.
This is despite several relaxations under the Startup India framework for DPIIT-recognized startups.
“The biggest problem with the tender system is that it is designed for large, established firms that are willing to commit to standardized delivery and minimize risk, leaving little room for experimentation or deeply localized solutions,” says Akash Hingorani, principal architect and co-founder of Oasis Design, a firm that has worked on several large-scale urban regeneration projects.
“A road is not just a road. For example, the space under an elevated corridor can be activated, and roadside buffers can be used for rainwater management. A systems approach is needed – enhancing climate resilience, enhancing biodiversity, providing shade and addressing urban heat and flooding,” he says.
“So, cities now need to engage people who have the mental space to really experience and think deeply about them. The younger generation views mobility, living and public spaces very differently,” he adds.
Milind Mhaske, CEO of Praja Foundation, a Mumbai-based non-profit that works on urban governance, agrees: “The problem is that when we want good tech solutions, companies are evaluated based on turnover, prior experience and financial strength. As a result, bigger companies win, while smaller, more capable players are left out. It’s not about favoring startups – it’s about getting the best solutions for citizens.”
He said that the government often fails to play an enabling role. “It simply issues a tender and steps back. It seems Ahmedabad is trying to create that enabling environment. But this should not remain a one-off initiative driven by individual officers; it has to become a standard operating procedure. Open the data, invite competition, test solutions and then select the best. If it depends on individual officers, it will disappear when they are transferred,” he says.
The city as a laboratory
In fact, the Ahmedabad model reflects a broader global shift towards treating cities as experiment sites. For example, European cities such as Amsterdam have pioneered the Urban Living Labs approach. Through the AMS Institute (Amsterdam Institute for Advanced Metropolitan Solutions) and the city’s Startup-in-Residence (STIR) programme, the municipality provides real urban spaces – roads, energy systems and public infrastructure – for co-creation with startups, researchers and citizens. Experiments with clear mechanisms for procuring successful innovations directly test mobility, energy, circular economy and other solutions in real-world conditions.
In the United States, cities such as New York and San Francisco have experimented with GovTech sandboxes – controlled testing environments that allow startups to pilot their solutions on real city problems with relaxed procurement rules, effectively bypassing the rigid RFP (request for proposal) and lengthy traditional tender process.
Hitesh Vaidya, urban expert and former director of the National Institute of Urban Affairs (NIUA), says that like Ahmedabad, all Indian cities should strive to become living laboratories.
Vaidya says, “Just as students from IIT Kharagpur or IIT Kanpur often go to Delhi or Mumbai to work on urban problems, why can’t the city where the institute is located become their laboratory? If IIT Kanpur develops air quality monitoring devices, they should first test them in Kanpur. If successful, the solution can be scaled up to other cities.” “Only then will ideas move beyond academic practice and actually be implemented on the ground.”
He calls Ahmedabad’s new policy “bold”, but cautions that Indian cities are generally risk-averse. “Any municipal commissioner thinks twice before doing something new. He has to learn to take calculated risks for the right solutions. Even under the National Urban Digital Mission, it was relatively easy to buy software – the real challenge is in embedding these solutions into the day-to-day processes of the municipality,” he says, “Innovation cannot work in isolation; it must align with the long-term vision and strategy of the city.”
A template for other cities?
Abhinav Shekhar Vashishtha, co-founder and CEO of WeVOIS, a civic-tech startup specializing in IoT-based waste management solutions, says one of the biggest hurdles startups face in working with municipalities is access to real civic infrastructure and data for testing.
“So, the most important change is that cities are opening up access to real infrastructure and data. Otherwise it is extremely difficult for startups to get reliable citizen data or test solutions on live systems. Governments usually ask for three full pilots, but how do you get those pilots in the first place?” Vashishtha says.
Agarwal emphasizes the need for strong security measures for data governance. “All civics-tech is built on a foundation of urban data.” “However, as American political economist Elinor Ostrom has shown, common-pool resources do not manage themselves – they require clear rules on access, purpose, and accountability,” he says.
Agrawal advocates a strong national institutional framework to support municipal innovation.
“Just as the RBI oversees the NPCI for payments, we need a similar institution for city municipalities. The most credible option is a permanent City Innovation Authority under the Ministry of Housing and Urban Affairs (MoHUA), which is not a temporary mission-mode body but a statutory authority with in-house engineering capacity, co-funding mechanisms and special procurement rules. States should be required to follow its framework to access central urban grants,” He says.
While such institutional reforms can create an enabling framework, their success will ultimately depend on whether startups are able to convert this opportunity into effective real-world solutions.
Vashishtha says, “Unlike big companies, startups have greater appetite, work harder and are more willing to take risks. If given a real chance, startups are more capable than big players in solving our urban problems. I believe Ahmedabad’s new policy has the potential to transform public-startup partnerships.”
