The atmosphere of a village fete is what Chris Purnell wants to achieve for the Edinburgh Mela.

Well, maybe – if you're thinking "global village". With its riotous colours and smells of sizzling spices, this is a far cry from the old tug-of-war followed by a bit of giant vegetable judging on the local green. In fact, Purnell's desire, in his first year as director of the festival, is not just to produce a village fete but one with amazing art.

"You want that accessible, relaxed, family sort of vibe," he says, "so you feel you can sit and have your picnic on the grass. But the important thing is you can also go to see contemporary African storytelling, or some amazing sarod-playing from Soumik Datta, who is an amazing UK-born virtuoso."

However, perhaps to Lancashire-raised Purnell, who for the past three years has managed the giant extravaganza of British Asian music and culture that is the O2 London Mela, the Edinburgh show is rather villagey. Last year it drew 27,000 – which, for the Scottish capital, is a massive success, although a far cry from the 90,000 that London pulls in during the course of one day.

"The London event," explains Purnell, "is quite different. It's enormous. It has media partners and big sponsorship deals, so it's a kind of different animal, very much driven by the Asian music scene. But I didn't feel there was the scope for that overarching arts agenda. There is in Edinburgh – and that was what attracted me."

Once upon a time, the Edinburgh Mela was owned by the city's South Asian community which founded and organised it back in 1995 when it was first staged at Meadowbank Stadium. It was one of a rash of such festivals that spread across the UK after the first Mela was held in Nottingham in 1990. Along with the Mela in Bradford the following year, the Nottingham event was credited as helping the Asian community see itself as a significant contributor to British society.

Now, however, it seems that, at least in Edinburgh, the Mela is fast becoming a festival for all immigrant communities. Purnell plans to programme some Polish work for 2013, for instance, and talks of bringing a Colombian circus over.

"My ambition is to try to broaden its scope," he says. "But the Edinburgh Mela has always had a tradition of that, so it's not like reinventing the wheel. Obviously there are a great many communities in Edinburgh who have chosen to call Scotland home. But I also want to try to make it embrace not only other communities within the city, but to reach outside and have an international outlook."

One of the striking things about this year's programme (and, indeed, the way Melas have developed more generally) is its urbanism, its sense that it is an expression of city life, of the multicultural hotch-potch, the collision of styles of music and dance that have generated out of waves of immigration and the close proximity of different traditions. A show such as Bright Night International's 9-2-5 – which combines parkour, acrobatics and capoeira with multimedia projections – embodies this.

"Parkour and hip-hop are all very urban," notes choreographer and lead dancer Christina Gusthart. "I think a lot of people can relate to the ideas in the show, no matter what religion or background. The show is just about the normal idea of a 9-to-5, the mundanity of life, and the fact that people can also have some extraordinary talent even if they may be quiet at the office."

Gusthart herself, although her family ancestry is resolutely Scottish, is a global soul and spent six months living in India where she worked on Bollywood films, dancing in back-to-back productions. She is also notable for being a Leither, one of the many performers, staff and volunteers at the festival who is genuinely local. For the last few years, the Edinburgh Mela has had its home on Leith Links, and Purnell remarks on how much the Leith community has taken the festival to its heart.

He is right. I live in Leith myself and know the affection the locals have for the festival, the anticipation they feel for a day of music and dance, of sitting family-next-to-family on the grass, eating dosai and kulfi. Although the area has its own Leith Festival, this feels like another event that is ours, an alter ego of the other, brighter, more filled with razzmatazz and colour.

Breige Swift, for example, grew up in the area and has been going to the festival since she was five years old, dragged along by her dad who performed African drumming and had an interest in other cultures. She is now artist coordinator for the event, and believes the people of Leith "feel an affinity" for the Mela.

Another way in which the Mela is quite the opposite of the village fete is its increasing professionalism. Purnell – with three years running the O2 London Mela and a long history in outdoor events behind him – is part of that, and although this means the festival is no longer truly owned by the communities involved, everyone does seem to be enjoying the slickness.

"When it started all those years ago, it was a completely different thing," says Priya Shrikumar, artistic director of Dance Ihayami and a choreographer who has performed many times at the Mela. "Personally I never really used to like the Mela then. There were so many problems with it. But now it's a good feeling when you go there because it's all organised efficiently, it's something to look forward to. And it's a great place for good Asian culture and food."

Kerala-born Shrikumar, whose school currently attracts dancers of all ages from 19 nationalities, believes it is an important mixing site for the Asian population. "The problem is that although [Asians] are very community-oriented themselves, their integration with other communities is quite poor. But I feel that because this Mela is a venue to which everyone comes, because the mainstream also comes, it is a good place for integration for everybody."

Perhaps, too, one of the reasons for the popularity of many of the UK Melas is that, generally, they are spaces in which the divisions of religion are left behind, and people come together in a shared love of music, food and dance.

Purnell is keen to encourage that feeling in Edinburgh. "This is an opportunity to keep religion out of it," he says. "It's not about flag-waving or having a particular agenda. It's not a monoculture event."

This is not to say that the Mela isn't responsive to religious sensitivities. For instance, its date has moved around the calendar, partly in response to the shifting timing of Ramadan. "Obviously, given that food is such an important part of the festival, we try to avoid Ramadan," Purnell explains. "If you're having a food festival in the middle of Ramadan, it's not good for those Muslims who are attending. It would be a kind of torture."

This year's date, at the end of the Edinburgh International Festival, he believes, is a good one. He adds: "Ramadan is moving earlier in the year for the foreseeable future, so we're good for a while."

In an era of expensive music festivals and high ticket prices, one of the Mela's virtues is that it is cheap. In earlier years, entrance to the main event was free and visitors paid for select ticketed events. Now everyone pays £3 at the gate to enjoy everything on offer. Purnell has said he wants to create "an accessible festival" for the people who live and work in Edinburgh – and this policy, introduced several years ago, certainly does that. In fact, especially when you can see the big opening show, Rama And Sita, a giant production involving pyrotechnics, puppetry and dance, for free.

The low ticket price of the Mela speaks volumes about the amount of funding it receives: the Scottish Government's Expo Fund gave £100,000 to the Mela this year.

However, it was also one of the organisations at the centre of the recent row over Creative Scotland's sending of letters declaring the end of its flexible funding programme. The Mela had a stay of execution – rather than have this funding cut off in March, it was extended through to September.

Even given these difficulties, the feeling is that the Mela is a way of getting people together, of creating a platform on which the wonders of diversity are something to celebrate. This is where we learn to party together.

Purnell, for one, believes the Mela represents multiculturalism at its best. "You can see that from the wide range of people who come," he says. "You can see it in the way they embrace it."

Edinburgh Mela is at Leith Links from August 31-September 2. For full programme details, see www.edinburgh-mela.co.uk

Edinburgh's celebration of Asian tradition is changing. With a new director in charge, it is looking to embrace a whole world of culture By Vicky Allan