Drawing on original historical research and expert interviews, I trace the policy of density regulations in a megacity. I provide evidence on the policy evolution of density regulations and its relation to informal housing in Mumbai, since the late 1800s. I then use counterfactual analysis to analyze how local politics constrain deregulation, and assess whether deregulation would have the proposed effects of affordable housing for the bottom of the pyramid. In the last 20 years, these regulations have been converted into a market-based instrument to redevelop informal housing and achieve a range of urban development goals. Finally, expert interviews suggest that de-regulation is not perceived by key actors as key to a sustainable model of affordable housing.