Chief Minister Prithviraj Chavan told reporters that conducting the function in the country's financial capital on the lines of the one at Rajpath in New Delhi was being considered for a long time.
"There will be parade of Air Force contingents and colourful floats from different parts of the state," he said.
Mr Chavan said a cash prize of Rs 50 lakh will be given to the best float. Second prize will be Rs 25 lakhs and third prize will be Rs 15 lakhs.
The C-shaped road, popularly known as the Queen's Necklace Road, links Nariman Point to Babulnath and Malabar Hill in South Mumbai.