It has been awhile since we last heard about this film -- its formerly attached director, Peter Weir, dropped out last summer. But there were probably few worries that Depp would run out of projects to work on. Aside from Sweeney, he's also slated for The Rum Diary and maybe Rex Mundi. Plus, his production company has a number of adaptations he could star in. Still, Shantaram is the film that Depp paid $2 million for rights to, so he was probably most interested in getting it off and running again.
Anyway, Nair is the best choice for any Hollywood film set in India. Few Indian filmmakers have been as successful at crossing over in the States as she, and she also seems to fit better as a liason between American and Indian cinema than some of her peers (Mehta isn't Hollywood enough and Chadha has totally sold out). Now she just needs to get acquainted with Australia, and she'll do a terrific job.
More on Mira Nair:
TIFF Interview: Mira Nair