The airport was earlier to be developed by the Maharashtra Airport Development Company Ltd (MADC).
The proposed airport will now be developed by the AAI in three years and the runway will be used to land A-320 type planes.
Night landing facility, taxi way will be developed.
The existing airstrip will be expanded up to 2,500 metres.
The land is being given to the airport authority on a lease of 60 years for Rs 1 lakh every month.
State government's flights, helicopters, heli-ambulances and emergency operations will not be charged for landing and there will be no commercial use of the land.
The development will not take place on BOT basis.
The government has sanctioned Rs 34 crore for upgrading infrastructure on roads leading to the proposed airport and a committee headed by the Chief Secretary has been formed to monitor the works.