Modern organised crime, defined as the continuous unlawful activities of members of a highly disciplined association engaged in the supply of illegal goods and services was firstly experienced by Mumbai. Being the financial capital of India, Mumbai has been the main center for organised criminal activities with several gangs battling for supremacy. After independence, the prohibition policy of the Maharashtra government provided a lucrative ground for bootlegging. This business was associated with Matka, the illegal gambling racket. 

In the 1960s, Varadraj Muniswamy Mudaliar, nicknamed Vardhabhai, who started with theft in the Mumbai dockyard emerged as the sole controller of bootlegging from Gujarat to southern Mumbai. With the acquisition of considerable wealth, he subsequently attained a ‘Godfather’ status among the poor by providing them protection and speedy justice. To gain legitimacy, he also played an important role in organising the annual Ganesh festival. Vardaraj was the first criminal who could subvert the law enforcement system. Haji Mastan and Yusuf Patel, who specialised in smuggling gold and silver and later invested their money in construction and real estate business, were the contemporaries of Varadraj. Smuggling being their main business, their hold was limited to south Mumbai and the dockyard area. Later, Haji Mastan became a self-styled politician, while Yusuf Patel established himself in the construction business.

The imposition of the national emergency in 1975 broke the supremacy of these gangs and provided an opportunity for unemployed youth and small smugglers to make their living through illicit activities. The collapse of the Mumbai textile industry led to the spectacular rise of the Dawood Ibrahim gang.  The son of a former Criminal Investigation Department (CID) constable, Dawood Ibrahim moved to the underworld in 1981 immediately after the murder of his eldest brother Shabir, where he along with his lieutenants Chhota Shakil and Chhota Rajan emerged as the most dreaded gang in the city. After relocating to Dubai in 1984, Dawood operates from there with a business turnover of approximately Rs. 2000 crores (US$ 426 million) per year.

The Mumbai underworld has changed in many ways following the Mumbai serial blasts of 1993 that left 257 dead, 713 maimed, and property worth hundreds of crores damaged.

Before 1993, the underworld attracted unemployed youth from Hindu and Muslim communities alike. Alongside the communalisation of Mumbai, its underworld too got communalised. With Dawood’s involvement in the serial blasts, most Hindu criminals left the gang; in fact, Dawood’s trusted lieutenant, Chhota Rajan, formed a new gang in 1994-95 and established a new center for criminal activities in Southeast Asia.

A few hardcore organised gangs led by Muslim leaders have led to the popular, nevertheless misleading, perception that the Mumbai underworld belongs to the Muslim community; in reality, poor backgrounds and low levels of education form the common thread connecting majority of the criminals rather than any particular religious faith.

The transformation does not stop just there: most of the gangsters hail from outside Maharashtra, especially from the states of Uttar Pradesh and Bihar, while until the late 1980s most of them were from Mumbai and its neighbourhood of Konkan and Marathwada; use of kattas (handmade pistols), mostly made in the northern states of India, has proliferated.

The real disconcerting fact for law enforcement agencies is the transnational nature of these criminal networks, which, in turn, has led to the steady increase of hawala (money laundering) transactions and illegal trade in sophisticated arms and illicit drugs.  According to the Mumbai police, they seized 459 AK56 rifles, 12 pistols, 1150 detonators, 49,000 rounds ammunitions, 3.5 tons of RDX and 459 hand grenades immediately after Mumbai serial blasts.

With changes in economic policies, smuggling of gold and silver has become less lucrative. Now extortion, film financing, drugs and arms trafficking, and smuggling computer parts have become the main activities of these gangs. Though the relationship between criminals and the Indian film industry and business community is not new, it has become more intimate and mutually beneficial now. Dons no longer are satisfied with just a share in the profits; they want partnership by becoming producers and getting overseas rights for film and music distribution. 

The Mumbai mafia has transformed structurally and tailored its strategies according to changing times. Though gang rivalries coupled with effective implementation of the Maharashtra Control of Organised Crime Act (MCOCA) (1999) has made the job of the Mumbai police easier, tackling the spread of an underworld with transnational linkages into the legitimate business of hotel, real estate and film industry is the larger challenge.