Organisers of the event announced the cancellation after a meeting with Shiv Sena president Uddhav Thackeray this evening at 'Matoshree', the Thackeray residence in suburban Bandra.
The decision was taken despite a snub to Sena by Maharashtra Chief Minister Devendra Fadnavis who said adequate protection would be provided to Ali and that the concert, organised in memory of late ghazal singer Jagjit Singh, would be held according to schedule.
A source close to Uddhav Thackeray told PTI that the Sena president asked the organisers to refrain from having any Pakistani artiste perform at such programmes.
Reacting to the development, Ali said the concert was not cancelled from his end. "Atmosphere is not conducive for me to perform," he said, adding, he wants Indo-Pak ties to improve.
He further said that whenever his fans call him with love, he goes and performs.
Describing Jagjit Singh as his "good brother", Ali said wherever they met and performed, "we were one".
Justifying the cancellation, Roy said, "Since the situation on the border is not conducive, it is not correct to call and promote any Pakistani singer".
Shiv Sena said, "Ceasefire violations are taking place unabated and yesterday also four jawans were killed in firing by Pakistan which is continuing to sponsor terrorism in this country.
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