Everyone is aware that modern cities are performing more and more of services necessary to the functioning of society. There is awareness that the vital services are not performed in the same proportions by all cities. Almost every geographer would identify Detroit as a manufacturing city, Glasgow as a port city,Manchester as Industrial city and Beijing as a Trading center there by indicating that one city does more than its share of manufacturing another provides trade and few facilitates the market for the finished goods.

Perhaps this classification is done more by faith or intuition than on the basis of exact knowledge. At what point does an economic activity become more important enough in the city to be of special significance? Can criteria be devised that will determine which city should be labeled manufacturing or trade cities and centers for market?

Telangana is the 29th state of Indian union with 3,50,03,674 population and 38.12% urban growth. Around 30% of the urban population is residing in the capital city of Hyderabad. The total number of cities during 2011 census was 160. The economic activity is the main cause for the city growth. Standard deviation procedure applied for city classification. These cities with strong economic potential have great scope for rapid development by using innovative technology and there by rising as creative centers have made them to emerge and transform as smart cities. It is the purpose that this paper presents a methodology that will form a basis for such classification.