The tender pegged the project cost at around $2.3bn and said about 57,000 "slum structures" would have to be replaced in the Dharavi slum.
Considered a real-estate eyesore, Dharavi stands on a 2sq km patch of land - estimated to be worth over $10bn - and houses about 600,000 people in ramshackle buildings.
It was once a quiet fishing village before migrants, mostly from southern India, swelled its population and started hundreds of small businesses that make everything from leather goods to electrical equipment, junk jewellery and counterfeits.
But it also stands in stark contrast to Mumbai's aspiration to be a modern city.
Under the makeover plan, authorities want to construct more than half a dozen multi-storey buildings to house "eligible slum-dwellers" and leave the rest of the area for commercial activity.
But the plan is suspect in the eyes of most of Dharavi's inhabitants who say they fear they will be tricked out of their homes.
"Who is eligible? What is the eligibility? What happens to the rest of the people?"
Jockin Arputham, head of India's National Slum Dwellers Federation
"Who is eligible? What is the eligibility? How many apartments? What happens to the rest of the people?" Jockin Arputham, head of India's National Slum Dwellers Federation, said.
"There is no transparency in this at all."
Arputham said they had hoped to be involved in the planning of Dharavi's re-development, but now planned protests to force their point.
"We will cripple train and air services in Mumbai," he said.
Dharavi sits between two major suburban railway tracks and one end of the slum runs right up to the boundary of the city's airport.
Its residents say they are also worried how they could run their businesses after the re-development as no space had been earmarked.
Raju Korde, who calls his group, the Save Dharavi Committee, said: "All these issues have to be looked at; otherwise this plan will just remain on the drawing boards."