The award will be presented to her at Buckingham Palace in London later this year.
"Her Majesty the Queen approved the award to Mehta, a British national, in recognition of her work and service to underprivileged communities in Mumbai, and the NGO, Apnalaya," a statement issued by the British Deputy High Commission said.
"The Order of the British Empire (which has several ranks) was created in 1917 by King George V to recognise individuals, who have contributed valued service to their communities. MBE is a rank of the order and stands for Member of the Order of the British Empire.
"In the last 25 years, Apnalaya, led by Annabel has particularly focused on the Shivaji Nagar slum community, adjoining the Deonar dumping ground, with a population of around 600,000, many of whom live in challenging conditions. Apnalaya works to promote issues of health care, gender, education and livelihoods using an integrated community development approach.
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"Annabel's passion for social work and improving the lives of people in the slum communities is evident as she has been working on an entirely voluntary basis at this grassroots organisation. She represents a shining example of the Living Bridge between India and the United Kingdom," the statement added.
British Deputy High Commissioner in Mumbai, Kumar Iyer, said, "Through her philanthropic work, Annabel represents a remarkable example of the amazing voluntary work that British Nationals do overseas. Her commitment to helping the vulnerable sections of Mumbai's Shivaji Nagar slum community have been duly acknowledged. Annabel is a beacon of selfless service and a campaigner who strives to improve the lives of the less fortunate. I am delighted that Her Majesty has graciously approved this award. Annabel deserves it."