The new Dharsa Urbansa project will include two new residential towers and a new public park, a spokesman for the project has said.
The project is one of a number of ambitious initiatives underway in the city to help create a more livable urban environment.
The city’s planning authority said it aims to build a pedestrianised city by 2050.
The development is being overseen by the city’s Public Works Department, with help from the Dharatidas, the community organisation set up to revitalise the area.
It will also include a new commercial park, which will offer more space for residents to live.
The new project will be located at the corner of Dharasahandir and Naka Pukka, near the city centre.
The area was originally a textile mill, but is now used as a commercial area, and the new tower will be the new site for the new park, spokesman Ajay Raza said.