The latest plan involves the creation of 70,000 flats over an area of 200 acres, including 50 acres that has to be contributed by the Indian Railways.
A total of 55,000 families will be rehabilitated under the program.
The size of each flat will be 350 square feet, with the entire construction expected to be completed in seven years.
Given that the proposal has found a lukewarm response from Indian real estate players, the tender for the project will be open to international players as well, according to the government.
The government will create a special purpose vehicle or SPV to carry out the project.
Dharavi redevelopment has been on the cards for close to two decades, but is yet to take off due to a variety of reasons, including opposition from the inhabitants and misgivings by real estate developers.
Under the slum redevelopment programs of the government of Maharashtra, slum-dwellers are temporarily moved to another location, while the land is handed over to the developer.
The developer in turn creates high-rises in place of shanties. Around half of the flats in the high-rises are given free of cost to the slum-dwellers, while the remaining are sold by the developer to others to recover their cost of development.
Dharavi has already seen such slum redevelopment projects in certain areas.