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Alia Bhatt was born on 15 March 1993, to Indian film director Mahesh Bhatt and actress Soni Razdan. Her father is of primarily Gujarati descent while her mother is of Kashmiri and German ancestry. Bhatt has one sister, Shaheen (born 1988) and two half-siblings, Pooja Bhatt and Rahul Bhatt. Actor Emraan Hashmi and director Mohit Suri are her cousins while producer Mukesh Bhatt is her uncle. Bhatt graduated from Jamnabai Narsee School IBDP in May 2011.
Bhatt's first acting role was as a child artist in Sangharsh (1999), starring Akshay Kumar and Preity Zinta where she played the younger version of Zinta's character. She had her first leading role in 2012 with Karan Johar's Student of the Year, alongside Sidharth Malhotra and Varun Dhawan. She portrayed the role of Shanaya, a sophisticated teenage girl who is in a relationship with Dhawan's character but is attracted to the character played by Malhotra. Taran Adarsh of Bollywood Hungama wrote of her performance, "Alia's role is reminiscent of Kareena Kapoor in Kabhi Khushi Kabhie Gham. Stylish, classy, born with a silver spoon, she's someone who loves to flaunt not just her clothes and bags, but also her riches. Extremely photogenic, Alia makes a super-confident debut." Film critic Anupama Chopra of Hindustan Times also mentioned the similarities with Kapoor's character, but noted that her performance was "without the killer attitude."  Student of the Year was a financial success, grossing ₹700 million (US$12 million) domestically.
In 2014, Bhatt played the protagonist of Imtiaz Ali's road film Highway opposite Randeep Hooda. Her portrayal of a lonely teenage girl who develops stockholm syndrome after being abducted was acclaimed by the critics. Rachit Gupta of Filmfare mentioned that "[a]t 20, it’s surprising how Alia has got so many deft nuances right. It’s as if the actor has grown with the character. She is truly one of the most promising new actors in Hindi films." Sonia Chopra of Sify added that Bhatt is "[c]ompletely immersed" in her role, and that "Alia’s uninhibited and raw performance will have you emotionally invested in her character all through." Though the film underperformed at the box office, it earned profits with the aid of non-theatrical rights.
Bhatt next featured in Johar and Sajid Nadiadwala's joint production 2 States with Arjun Kapoor. An adaptation of Chetan Bhagat's novel of the same name, it narrates the story of two IIM Ahmedabad students who encounter trouble in convincing their parents to approve of their relationship. For her role as Ananya Swaminatham, a headstrong Tamil girl, she learnt the language. Critics were appreciative of her performance with Rediff.com publishing that Bhatt "really grows into the character and makes you believe that she's a career-oriented IIM-A grad." Shubhra Gupta of The Indian Express added that Bhatt was a "surprise" and was "easy and fresh and natural." The film emerged as a major commercial success, earning over ₹1 billion (US$17 million) in domestic ticket sales.
As of May 2014, Bhatt is filming on Johar's next production Humpty Sharma Ki Dulhania alongside Varun Dhawan.