Mumbai will unveil its lavish and long-awaited new airport terminal Friday, part of a $2 billion revamp that aims to challenge India's reputation for shoddy infrastructure and boost the financial capital's status.

Prime Minister Manmohan Singh will inaugurate the terminal in the city's north, more than a year after its initial scheduled opening.

With a design inspired by the peacock, the national bird, the new terminal for both international and domestic flights boasts India's largest public visual arts programme, largest car park, a new six-lane elevated road to ease traffic and 140 immigration counters.

A vast improvement on its congested and uninspiring predecessor, the terminal has however been years in the making and illustrates some of the difficulties of executing megaprojects in India.

It had been due for completion in 2012, part of an airport overhaul that has risen in cost from 98.02 billion rupees ($1.58 billion) to 125 billion rupees ($2.02 billion).

Unable to shift tens of thousands of shanties on the airport land area, the developers only had about 1,400 acres (570 hectares) for use, leading them to create the X-shaped, "vertical" new terminal across four floors to make the best use of space.

Most slum-dwellers on the Mumbai airport site, their tin-roofed homes a stark contrast to the grand new edifice, refused to move because the relocation conditions were "not clear", said Jockin Arputham, president of the National Slum Dwellers Federation.

"People want to know what the government is offering," he told AFP.

Disputes over the relocation of a politically-charged statue of a 17th century warrior king also led to a 17-month delay, and -- perhaps the biggest challenge -- the terminal had to be built on the city's existing airport site while full flight operations continued.

The airport's elegant design has focused on Indian identity, from its lotus flower chandeliers to the check-in floor's 272 sky-lights, with special lenses that move according to the sun to create reflections like peacock feathers on the floor.

While the terminal has capacity for 40 million passengers per year, there are serious concerns over the future strains on Mumbai's aviation growth given the lack of space in the densely populated city, where more than half of the inhabitants live in slums.

Kapil Kaul, South Asia head of consulting firm CAPA (the Centre for Aviation), described the terminal as "an iconic addition to the aviation landscape", but said the airport would become "air-locked" in a few years, reaching its maximum number of flights.