I've decided to leave the question up, but I must remind everyone of our 20 year rule which is very much in effect here. Everything up to 1997 is a fair game, but beware of current events and dragging modern politics into your potential answers. Thank you!

There were a lot of reasons that were responsible for breaking the Underworlds back in Mumbai.

Mumbai underworld has a extremelyy long history and it is impossible to cover 50 years of history from 1930-1980 in one reddit post.

So I will just give a small recap. By 1980s - Out of the original 7 mafia families that ruled Mumbai -only 1 family was left with any significant power.

That is the infamous D-Gang. The D-Gang was the mafia organization of Dawood Ibrahim. Dawood was the son of a low police constable who rose up through the mafia hirerachy to ultimately end up as the last man standing in Mumbai after an extremely bloody inter gang wars between the 7 original families.

So now that I have done a quick recap, here are the reasons why organised crime ended in Mumbai

#1)Liberalisation Of Indian economy and end of socialist India

In the end of 1980s India came to near bankruptcy due to an extremely depleted foreign reserves, a non existent economy, collapse of India's biggest trade partner-the soveit union. Sanctions from world government due to nuclear tests a decade ago.Imports were at all time high. Exports and value of rupee were at all time low.

India was 14 days away from being officially declared as bankrupt. In order to escape it, India finally ended the socialist goverment policies and extreme government control that had been in place since 1947.

As a result, All government regulations over trade were removed. Liquor, alcohol, Gold, all western products were legally allowed to be imported in India.

The Indian government officially endorsed free market capitalism as the guiding principle for future of Indian economy.

While entire India was celebrating, The mafias were extremely mad and pissed.

The reason was that main source of income for mafia was the illegal smuggling of gold, liquor, western products into india and selling them on black market.With the legalisation of all of the above imports by the government of India - The mafia were officially robbed of their major source of illicit income.

With no money to fund their operations and to pay the salaries of their henchmen, most of the junior mafia families dissolved and left Mumbai for greener pastures.

#2) Formation of an Pro Hindu Right wing goverment in Maharashtra(where mumbai city is located)

Disclaimer: The D gang was founded by Dawood Ibrahim. While he was a muslim by religion, there is no proof of him having jihadist leanings. However, the D gang had a lot of Islamists as its members and the D-gang was responsible for the Mumbai serial blasts(that left hundreds dead) to avenge the demolition of a muslim mosque by right wing hindu extremists.This caused the public to see the D-gang as a "Muslim extremist organization"

The 1980s and 90s marked the rise of the Hindu politcal movement and parties. These parties were in most of the cases outspoken about restoring the power back in to the commen hindu who according to them were being politically supressed by "*Pseudo secular Left wing" who "are afraid to take actions against people belonging to their muslim votebank".

Thus, the Hindu right wing came to power in Maharashtra on a mixture of Nationalasm, Patriotism and Promise of restoration of Hindu power.

This right wing goverment had major grudges against the D-gang. D gang had assasinated a large number of Hindu right wing leaders and were also responsible * for the largest terrorist attack (uptil then) in human history * when they carried out the Mumbai serial bombings leading to thr death of 100+ Mumbaikars.

These bombings were done by the D-gand (which were dominated by Mulims) as a retaliation for what it perceived as unjust slaughter of Muslims in the Hindu-muslims riots that happened a short while ago all across India.

The new government authorised the Mumbai police to take any actions neccesary to bring an end to the D-gang.The government gave a 100% free pass to the Mumbai police to close the chapter of D-gang. The government promised to provide complete legal protection to all mumbai police actions.

With the state government behind them, the Mumbai police went on overdrive to take down every single memeber of the D-gang from top to bottom who were still in India.

#3) "Encounter" campaigns by Mumbai police

Encounter killing" is a term used in India since the late 20th century to describe killings by the police or the armed forces, allegedly in self-defence, when they encounter suspected gangsters or terrorists. In the 1990s and the mid-2000s, the Mumbai Police used encounter killings to attack the city's underworld, and the practice spread to other large cities.

In simple words, Encounter is "extra-judicial" killing of a criminal to ensure that "quick justice" is served. (the morality of it is another discussion)

Anyways, Mumbai police started gunning down all know D-gang members in Mumbai streets, their houses, their offices.

As soon as Mumbai police found the presence of any D-gang members, they were quickly "encounterd" aka gunned down.

The aim of the Mumbai police was to put the fear of instant death into the Hearts of Mafia. The aim was to scare off the mafia from even steppimg foot in Mumbai.

And it was largely successfully.

After an intensive war between D-gang and Mumbai police, D gang was left severly depleted.

D-gang original founders had already ran away to Pakistan and Dubai after the Mumbai serial blast.

The remaining members were either imprisoned or killed by Mumbai police.

Continuous encounter killings by Mumbai police caused a massive drop of people seeking employment in the D-gang.

By 1990s, Mumbai police had to stop their encounter campaign because several cases in Indian court by victims of Mumbai police killings. Also human right organization were rasing voices against Mumbai police in Delhi.

However the work was already done.

By the end of 20 the century, Mumbai was almost organised crime free as all mafia families were either dead or had fled the country.

The mafia families who were left: quit organised crime and entered politics or engaged in white collar crimes only

#Source

From Dongri to Dubai- A complete history of the Munbai underworld

Link to the book

http://www.amazon.in/Dongri-Dubai-Decades-Mumbai-Mafia/dp/8174368949