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The article explores the opportunities in digital water space and the challenges in implementing digital water, for which they also provide their proposed solutions. They suggest PPP, mass awareness building and stakeholder training as the way forward to navigate this ecosystem.

There is an opportunity to use smart metering and supporting digital water management solutions to

  • Optimise the usage of scarce urban water resources by minimising leakage
  • Minimise Non-revenue water for the government
  • Optimise taxes for the consumers of water (beneficiaries)

There are challenges in building the infrastructure, maintaining the infrastructure, and helping the various stakeholders navigate the new digital ecosystem.

We have proposed a holistic set of solutions involving public-private partnerships in building and maintaining the infrastructure, mass communication to build consumer awareness and training/mentoring for key stakeholders.

Opportunities in the digital water space:

An exploding urban population scenario, inefficient water management with the traditional systems, the smart cities mission, water management objectives laid out in the smart cities mission and technological developments such as IoT and SCADA are some of the key factors that will drive growth and opportunities in the digital water sector.

Exploding urban population: Our cities with a burgeoning population depend heavily on the local water supply. There is immense demand and stress on the local water supply as the needs are ever-increasing for urban dwellers. Increasing apartment complexes, industrial layouts, and commercial spaces in all major cities of India have accelerated groundwater depletion and degradation of freshwater supply.

Share of Urbanized Population in India

*Source: Census, WHO Report

By the year 2030, at least twenty-one Indian cities will face acute shortages of water and may be marred by extreme climatic conditions and poor water management systems, according to a World Bank report.

Traditional water systems: From the perspective of urban local bodies or the water authorities in the cities, it is essential to ensure a safe drinking water supply to the cities 24/7. However, the public water utilities are riddled with inefficiencies such as lack of operational visibility, poor leakage and pressure management, inefficient energy utilisation and inaccurate demand and supply planning, because of archaic systems and processes present on the ground. The Central Water Commission report states that 40% of the water gets wasted due to leakages and thefts before it reaches the final intended consumer. With such a high rate of urbanization, these leaks and wastages lead to an increased cost of supply.

With the traditional systems on the ground, it is an ever-increasing herculean task for the ULBs to reduce water leakages and thefts and supply to every household while also maintaining the quality of the water supply. It becomes essential to reduce non-revenue water (unbilled water) to reduce the financial burden on ULBs for water supply and ensure the financial sustainability of the water utilities.

Smart Cities Mission: To combat various inefficiencies in public management systems the Government of India has launched the “Smart City Mission” and with it a plethora of “smart” opportunities have been introduced. The mission focuses on urban development and retrofitting or upgradation of urban facilities, thereby giving a decent quality of life to urban dwellers. Never was such a large-scale dedicated project launched by any government to build smart cities. A total of Rs 1,70,983 Crores has been invested to build 100 smart cities across the country. Amongst the many core infrastructure elements that are associated with Smart city projects, water management systems form a crucial part.

Water management objectives: The smart cities mission has laid out a strategy to ensure smart water supply to urban users, thereby paving a roadmap for city management and technology suppliers in the digital water space.  The mission includes and proposes efficient water management system solutions such as “Smart meters and management”, “Leakage identification”, “Preventive maintenance”, “Water quality monitoring”, and “Water recycling”. The mission also strives to keep the solutions measurable through a few key performance indicators.

A crucial KPI is the % of non-revenue water in the system. Non-revenue water (NRW) can occur through real losses such as leaks in pipelines or through apparent losses such as metering inaccuracies. High levels of NRW indicate severe detrimental impacts on the financial viability of water utilities. Apart from several environmental benefits such as reduced energy consumption and efficient resource management, an effective NRW is attractive for smart city management and water utility suppliers as it improves the bottom line through efficient management of operations and maintenance.

Another key performance indicator is the % of the establishment and maintenance cost of water supply. An optimal management of establishment and maintenance costs is necessary as there are always trade-offs between the two. A low establishment cost may lead to a high operations cost and vice versa. Inefficient management of water utility systems also leads to high maintenance costs leading to inefficient resource utilisation and unnecessary spending of budget on MRO activities.

A third important KPI is the % of O&M cost covered by urban users through taxes. Covering the increase in water management costs through frequent tax rate hikes may cause civil dissatisfaction. This practice is also not sustainable for the future of a city. The only alternative method is to reduce the operation costs through efficient systems management, thereby increasing the percentage of cost covered through user taxes.

The three KPIs coupled together provide an excellent opportunity for various stakeholders to take part in digital water solutions to combat various inefficiencies in the utility system.

IoT and SCADA: To meet the challenges of utilising a scarce resource efficiently and effectively measuring and billing the water supplied, advanced digital technologies are required. Smart water management uses a combination of hardware, software, and analytics for the efficient distribution of water in a city.

With the advancement of emerging technologies by various private organisations, Smart water solutions can be implemented using remote actuators, sensors, pressure valves and SCADA (Supervisory Control and Data Acquisition) systems.

The SCADA system enables remote 24×7 monitoring of the entire water supply distribution network including various parameters on a real-time basis such as:

  1. Quality of water (pH, chlorine, turbidity, dissolved oxygen level, chemical oxygen demand etc.)
  2. Water pressure
  3. Flow level
  4. Performance of Control elements (e.g. – valves, actuators)

Data regarding all these parameters are collected through various sensors placed within the network. The data from all sensors get assimilated at the central control station for analysis. The real-time data analysis identifies inefficiencies, anomalies, and leakages in the network. The analysis highlights the red flags for the authorities to take necessary actions, thus reducing response time while enhancing the reliability of the system. Issues of inequitable or inadequate water supply to parts of the network, complaints from citizens, loss of revenue due to unbilled water etc. automatically get taken care of through the SCADA-based smart water management system. This leads to cost savings through an overall improvement in energy efficiency within the network. Not to mention, there are even savings through reduction in operational costs.

With the advent of 5G and better computing power, the whole digital water value chain be realised with real-time data transfer and computing power

Challenges in implementing digital water:

However, despite the issues faced by our cities around water supply and the numerous advantages of using SCADA and IoT-based smart water systems, very few cities in India have implemented smart water management systems. Delhi, Ahmedabad, Bengaluru, Pimpri-Chinchwad, and Naya Raipur are some of the cities that have implemented the system. Nashik, Koppal, and Okhla are some of the places which have plans to implement the system shortly.

Main challenges in the adoption and implementation of IoT and SCADA systems for water management:

  1. MRO and compatibility: IoT and SCADA use a wide range of hardware and software which very often might be sourced from different vendors. To ensure that all the hardware and software are maintained and work seamlessly with each other might be a challenging task. If there are legacy systems in place, then it can be even more difficult, as the legacy systems might not be working well with most modern-day equipment or software used in SCADA systems. There also must be a large-scale exercise in maintenance, repair and overhaul of the new IoT and SCADA system with the existing ERP and MIS systems, ensuring harmonization of the data formats, data exchange protocols, security mechanisms etc.

To avoid issues of compatibility arising midway during the MRO process, the implementing authority must collaborate closely with vendors and the system integration partners to identify compatibility issues at an early stage and address them at the earliest.

  1. Scalability: IoT and SCADA-based digital water systems require several hardware such as sensors and actuators etc. To reach a wider area, the count of hardware components also increases proportionally. With the increase in the number of hardware components implemented, the cost of data collection increases. The lack of economies of scale in the system defeats the entire purpose of making cost-efficient SCADA-based water systems to identify inefficiencies in the system for which actions need to be taken. As these systems grow with more hardware components, the overall system becomes more complex and increases the risk of failure. Thus, reliability becomes an area of concern.

However, this can be managed if the implementation is done with a robust scalable system architecture in place from the beginning. The planning must be done with the possibility of adding more hardware components and processing more data without any compromise on the reliability of the system.

  1. Training – SCADA-based smart water systems are quite complex and require specialized knowledge. It is critical to devise tailor-made training programmes for people with a variety of skill levels and experience. Apart from the training, it can also be a huge change management exercise to drive government officials of water supply entities in this major shift in the method of working. The training should not just focus on features and functionalities but also on the procedures and protocols to be followed for effective maintenance and operations.
  2. Cost – Modern-day IoT and SCADA systems are complex systems with multiple specialized components and advanced software making them quite expensive to not just procure and implement but also to maintain. Ongoing support from the implementation partner for the deployment of specialized manpower, hardware maintenance and replacement, and software updates, is also a significant part of the cost. Therefore, in a large-scale project implementation of this nature, it is essential to prepare a financial model assuming costs of all nature and expected revenues to gauge the financial viability and the working capital requirement.

Proposed solutions to overcome various challenges in implementing digital water:

Stakeholders need to look at the problems and solutions therefore from a three-pronged approach. The first level is the set of public system stakeholders, the next are the project contractors, startups and private organisations who design, develop, operate, and transfer the systems and the last level is the end users or beneficiaries of the digital water systems.

  1. Public-private partnership is a powerful method to ensure innovation stays in public management systems. Water utility authorities can float tenders to attract leading startups and organisations to build, operate and transfer smart water systems. PPP in smart water management not only offers business opportunities for various private sector organisations but also ensures continuous innovation from the public authorities’ standpoint.
  2. Workshop with public authorities: Public advocacy organisations, consulting firms and technology innovators need to hold workshops with public bodies to keep them abreast of the latest technological developments and the various benefits that can be realised in public management systems.
  3. Engagement with beneficiaries: The water supply authorities or the Urban Local Bodies themselves need to engage with beneficiaries on a continuous basis to discuss the problems being faced and build consensus on possible solutions that can help them.
  4. Mentorship from benchmark cities: Urban development authorities can reach out to smart cities that have already implemented smart water solutions and request guidance from the respective leadership stakeholders on the implementation plans and roadmaps.
  5. Innovative financing methods: Project financing is a major obstacle as implementing IoT and SCADA-based hardware requires a significant amount of money. Since the public systems depend on financing the systems through taxpayers’ money, innovative financing options can be looked at. For example, through public-private partnerships, capital funds can be utilised to implement the systems. Performance or KPI-based financing can also be explored to bridge the gap in financing needs. Innovative financing can be a breakthrough in implementing smart water management systems.


In conclusion, there are good arguments in favour of smart metering and digital water management solutions. They have the potential to optimise water resource usage, minimize non-revenue water, and enhance tax efficiency with benefits for all stakeholders. The challenges of infrastructure development and maintenance, as well as navigating the digital ecosystem can be addressed by public-private partnerships, mass awareness building, and stakeholder training.

Bibhu Prasad
Senior Consultant | + posts

Bibhu Prasad is a management consultant at Avalon. He is a strategy-to-execution professional with experience in corporate strategy, digital transformation, cost optimisation, market assessment. He has worked with multiple industries - banking, logistics, chemicals, metals and public sector.


Shreyus Gopalakrishnan
Senior Consultant | + posts

Shreyus Gopalakrishnan is a Management Consultant with 4+ years of experience in Business plan formulation, Go to Market strategy, Market entry and Digital Transformation across sectors such as Agribusiness, Manufacturing and IT. His experience prior to Avalon includes working with the strategy department of an Agribusiness startup on areas such as carbon credits and market place platforms for farmers. Personally, he loves travelling to new geographies and exploring new cultures.


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