The fate of the facilities in the financial capital, formerly known as Bombay, will be decided at a later date, the BBC reported Wednesday.
The action affects some 1,500 dance bars employing more than 100,000 women who mostly dance to songs from movies made in the Mumbai film industry. Appreciative customers often throw money at the girls.
"It has been seen that a lot of youths in these areas splurge money in these bars and indulge in crimes. On an immediate basis, the licenses of these bars will be canceled," R.R. Patil, the state's home minister, told the state assembly.
Some bar owners say police take kickbacks and treat the bar girls like animals. But some bar girls say owners keep a large chunk of their tips and often resort to violence to stop them from leaving.