The sustainability of Rural-Urban interface is critical considering the rapid urbanization trends, especially in developing countries, which are majorly an outcome of increase in small towns. These Rural-Urban (Ru-Urban) areas act as a linkage between the rural and urban as a supplier of resources as well as assimilative capacities. The assimilative capacities of the Ru-Urban areas would be challenged with the growing population and increasing constraints on natural resources. Municipal Solid Waste Management (MSWM) and waste water would impact the assimilative capacities with the sheer magnitude of waste generated on a daily basis and its heterogeneous character. While resources insecurity can be an outcome of changing spatial structures along the rural-urban interface, leading to reduction in the sizes of resources pools. Designing of sustainable plan for these small towns require accommodation of the infrastructural and institutional inadequacies along with lack of scale of economies of these areas. This report studies the concept of urbanization and its variations in Indian context. It attempts to explore the rural-urban linkages in close association with environmental sustainability. Various aspects of urbanization and rural-urban linkages impacting the spatial structure and new town development have been addressed through the report. Identification of sustainability challenges of new townships with rural-urban linkages, along with anticipated faster rate of urbanization, is presented. Trends in urbanization and spatial transformation have been identified and a quantification rural urban linkage has been attempted for the case of Palghar.