Dharavi: Mumbai’s Biggest Gamble On Urban Transformation

Home to over 7,00,000 people — potters, leatherworkers, recyclers, and migrants from every corner of India — Dharavi's informal industries generate over US$ 1 billion a year. Yet, the land it sits on is valued at a staggering Rs 3 lakh crore (US$ 36 billion), making it one of the world’s most coveted urban parcels, and the focus of India’s most ambitious — and controversial — redevelopment project.

Dharavi’s legal and spatial complexity is legendary: 60 per cent is state-owned “notified slum,” 25 per cent belongs to the Railways, and the rest is a patchwork of private and disputed land. Under the Slum Rehabilitation Authority (SRA), only residents who can prove they lived here before 2000 — about 58,000 families — qualify for free housing, while another 60,000 face uncertain futures. 

The Adani Group’s 2023 bid, Rs 5,069 crore upfront, with an estimated Rs 20,000 crore in total investment, clinched the rights to redevelop 259 hectares. The project is being executed by a Special Purpose Vehicle (SPV), Navbharat Mega Developers Pvt Ltd, 80 per cent of which is owned by Adani and 20 per cent by the Maharashtra government.

From False Starts to Financial Engineering

Previous attempts at redevelopment, from the 1980s Prime Minister’s Grant Project (PMGP) to the 2004 Dharavi Redevelopment Project (DRP), failed due to resident resistance, legal ambiguity, and lack of financial muscle. The new model is different: It’s a public-private partnership fuelled by regulatory incentives and real estate speculation.

At the heart of the financial model is a Floor Space Index (FSI) of 4.0 — double Mumbai’s typical limit. This allows Adani to build up to four times the plot area, unlocking over 240 million sq ft of development over 15-20 years. Of this, about 100 million sq ft is earmarked for rehabilitation, and 140 million sq ft for free sale, including luxury towers near BKC, where flats fetch Rs 1-2 lakh per sq ft.

A critical incentive is the Transferable Development Rights (TDR) mechanism. The state mandates that 40 per cent of TDRs used in Mumbai’s new developments must come from Dharavi, creating a captive market for Adani, and potentially generating Rs 50,000-70,000 crore in revenue. “This isn’t just a housing project — it’s a land monetisation scheme,” says housing activist Simpreet Singh.

The SPV is also leveraging Compulsorily Convertible Debentures (CCDs), having already raised Rs 2,000 crore (with plans for Rs 3,000 crore more), and can bring in contractors for smaller parcels, spreading risk and accelerating construction. The SPV’s authorised capital is Rs 5,000 crore, with Rs 400 crore already paid up — figures that underscore the scale and seriousness of the investment.

Zero-Burden Rehabilitation & Policy Shifts

For eligible residents, the project is unprecedented in its generosity: Free 350 sq ft homes, 17 per cent larger than typical SRA units, and 10 years of maintenance at zero cost, with the developer mandated to deposit a statutory corpus fund for each tenement, ensuring long-term sustainability. This clause, a first in Indian urban redevelopment, is designed to prevent the decay that has plagued earlier SRA projects.

A major policy shift announced in early 2025 has further expanded the project’s social footprint: Over one lakh previously ineligible slum-dwellers — those who settled after the 2000 cut-off — will now be covered under a hire-purchase scheme or via Pradhan Mantri Awas Yojana (PMAY) subsidies. 

This move, reversing decades of exclusion, is expected to dramatically reduce unrest and set a new benchmark for inclusive redevelopment.

Another innovative clause is the allocation of 10 per cent of the built-up area in the rehabilitation component for commercial spaces, generating recurring revenue to cover maintenance costs beyond the first decade, and integrating economic activity into the new urban fabric.

Risks, Losses, and Social Fractures

But the incentives come with risks. The TDR market is already crowded; if prices fall below Rs 3,000 per sq ft, the financial model could falter. There are also major upfront costs: Rs 25,000 crore is earmarked for rehabilitation alone, with the rest going to infrastructure and commercial development.

Only half of Dharavi’s families are eligible for in-situ housing. The rest — some 60,000 — face relocation to distant sites like Deonar, sparking fears of social fragmentation and loss of livelihood. “They’re building towers for the rich on our sweat,” says leatherworker Imran Sheikh. In Kumbharwada, potter Sunita Patil asks, “How will our kilns fit in 300 sq ft flats?”

Height restrictions (due to the airport) cap towers at 45-60m, pushing surplus FSI into the TDR market. The SPV’s board includes urban planner Bimal Patel and environmental firm Aecom, who must address flooding risks and the challenge of integrating Dharavi’s US$ 1 billion informal economy. “Dharavi’s clay soil can’t support 60m towers without massive piling,” warns IIT-Bombay’s Chair Professor Arvind Kumar.

Profit, Loss, And Future Of Urban India

Adani is targeting a 20 per cent internal rate of return (IRR), banking on luxury sales (12 million sq ft at Rs 1.5 lakh/sq ft = Rs 1.8 lakh crore) and TDR arbitrage. For residents, the stakes are existential: Free, larger homes and maintenance for some, but displacement and uncertainty for others. Urban planners warn that the project’s density could strain infrastructure and create new urban stresses if not matched by robust upgrades.

For builders and bureaucrats, the project is a masterclass in leveraging regulatory innovation, financial engineering, and social policy. The inclusion of commercial revenue streams, statutory maintenance funds, and expanded eligibility signals a new era in Indian urban redevelopment — one where the lines between profit and public good are being redrawn at an unprecedented scale.

As former SRA chief Vishwas Patil notes, “If Dharavi falls to greed, it’ll blueprint the death of inclusive urbanisation.”

The world is watching — because what happens in Dharavi will shape the future of India’s cities.