Educated in India and Tanzania, Dholakia came to Britain to study at Brighton Technical College. He became active in the Liberal party and was elected to the Brighton Borough Council. From 1976 he served as member of the Commission for Racial Equality and has been involved in the Sussex Police Authority, Police Complaints Authority and Howard League for Penal Reform. He is the current chair of Nacro.
Dholakia was made a life peer as Baron Dholakia, of Waltham Brooks in the County of West Sussex in 1997 and sat on the Liberal Democrat benches in the House of Lords. From 1997 to 2002 he served as a Liberal Democrat whip in the Lords, and since 2002 he has been a Home Affairs Spokesman.
He was elected President of the party in 1999 and re-elected for a second term in 2002, in November 2004 he was elected joint Deputy Leader in the House of Lords.
Lord Dholakia is involved with a range of charities including being a Patron of CINI UK, the Child In Need Institute