India’s rapid urbanisation is driving the adoption of AI-powered infrastructure and cybersecurity protocols within its smart cities. This study evaluates the financial sustainability of these technologies in the Indian urban context, addressing critical gaps in lifecycle cost modelling, recurring cybersecurity expenses, and governance frameworks. Drawing on a comprehensive literature review of global and national research from 2019 to 2025, the paper identifies key challenges such as high initial capital investment, energy consumption of AI systems, and escalating cybersecurity risks. It emphasises the necessity of integrated financial models that incorporate operational, cybersecurity, and decommissioning costs alongside ethical and social equity considerations aligned with the Sustainable Development Goals. The study advocates for context-sensitive, scalable financial strategies tailored to India’s infrastructural diversity and socio-economic realities. The results provide actionable recommendations for policymakers and city planners to establish resilient, equitable, and financially sustainable urban innovation initiatives, thereby contributing to a sustainable urban transition in emerging economies.