How Dharavi's Rs 23,000-Crore Makeover Will Happen As Adani Gets Final Nod

Marked by a long history and delays, Dharavi's makeover stepped closer to reality as Maharashtra accorded its final nod for the redevelopment of one of Asia's largest slums.

The state government issued the resolution awarding the project to Adani Group's real estate arm, eight months after it was declared the highest bidder with a Rs 5,069 crore-offer. The letter of award will be issued soon.

Dharavi, located on the northernmost tip of Mumbai's island city, was the home of the Koli fishing community, according to the details from Slum Rehabilitation Authority. As Bombay emerged a key trade port, others began settling in, starting with potters from Saurashtra by the end of 1800s to leather tanners from Tamil Nadu and embroidery workers from Uttar Pradesh. Over the decades, this one-time swamp transformed into a decrepit urban sprawl on government land with its own flourishing economy.

The redevelopment project was initially mooted in 1997 by architect Mukesh Mehta but never got off the ground despite efforts by multiple governments.

In 2003-04, the state decided to redevelop Dharavi by rehabilitating its occupants. An action plan was approved in February 2004. But for nearly two decades, there was no headway as developers stayed away due to multiple reasons including the cost, transferable development rights in lieu of slum rehab and lack of clarity over the number of beneficiaries.

In November 2022, Adani Realty Ltd. quoted Rs 5,069 crore in its bid and emerged as the highest bidder, beating DLF's Rs 2,025 crore offer.

The world's largest urban renewal project will see the lead investor bring in over Rs 20,000 crore, SVR Srinivas, chief executive officer of the Dharavi Redevelopment Project, had told BQ Prime in an interview in December.

Once the letter of intent is issued, the developer will form a special purpose vehicle and contribute 80% of the equity, with the rest coming from the state government. The developer, in this case Adani Group, has to take care of rehabilitation, renewal, amenities and infrastructure components.

Initially, the SPV will be capitalised with Rs 500 crore, including Rs 100 crore from the government. It will construct free housing for eligible slum-dwellers. All future investments will have to be brought in by the lead partner without dilution of the government stake, Srinivas had said.

The SPV model provides for a state support agreement to ensure that no arbitrary changes can take place, irrespective of who is in power.