Officials said the foundation stone will be laid soon and the work is expected to start by the end of the year.
The project is being executed by the Delhi Tourism and Transportation Development Corporation (DTTDC).
"Like its popular predecessor near INA market in south Delhi, east Delhi's Dilli Haat too will come up on a covered drain. Required permissions have already been obtained," said an official. It will be located near the Mayur Vihar phase 1 Metro station.
The haat will have handicraft shops, stalls, food courts and amphitheatre.
The DTTDC had built its second Dilli Haat in northwest Delhi's Pitampura and another is slated to open at Janakpuri. The first one is located opposite INA market.
The Delhi Development Authority had recently approved the land use change of a plot spread over 27,000 sq metres near Akshardham temple for the Dilli Haat in east Delhi.