The giant statue overlooks the Sardar Sarovar Dam on the Narmada River, a centerpiece of the Rajasthan government's economic policy.
Rashesh Patel, a 42-year-old businessman, said "though Patel was from Gujarat state, all Indians were proud of him because of his stature".
The Prime Minister will address the gathering. The Prime Minister dedicated the statue to the nation and said that the monument will be a reminder about the courage of a man who thwarted efforts to disintegrate India.
At 182-metre, the statue is touted as the world's tallest - it is 177 feet higher than China's Spring Temple Buddha, now the world's tallest statue.
Modi announced the project "The Statue of Unity" in 2010 while serving as chief minister of Gujrat.
Drones and helicopters kept watch on the area, according to police, after the chiefs of 22 villages signed a letter calling on Modi to stay away from the inauguration.
Locals in the Narmada district of Gujarat state, where the statue is located, threatened to protest the statue's unveiling.More news: Jewish leaders to hold vigil in Madison after Pittsburgh synagogue shooting
It is nearly 29 metres taller than China's Spring Temple Buddha that stands at 153 metres, and nearly twice as high as the 93-metre Statue of Liberty in NY.
"No Indian will ever forget this day", said Mr Modi, who hailed Sardar Patel's "strategic thinking" in bringing together the disparate country after independence in 1947 and the Statue of Unity as "a symbol of our engineering and technical prowess".
The world's tallest statue, which will stand twice as tall as the Statue of Liberty has sparked a huge row because of its staggering cost.
Depicting the bald Patel in traditional attire, with a shawl over the shoulders, the statue used 210 000 cubic metres of cement, 25 000 tonnes of steel and 1 700 tonnes of bronze.
She accused the Bharatiya Janata Party and its government at the Centre of confining Patel to a region, saying this is an example of BJP's "narrow-mindedness".
The 182-metre structure of Sardar Vallabhbhai Patel is touted as the world's tallest.
The project is the brainchild of Modi when he was the chief minister of Gujarat.
At 597 feet, it is reportedly the tallest statue in the world, and almost twice the size of New York's Statue of Liberty.