Just as the US has film-makers working outside the studio system, India has a whole army of directors and producers attempting to carve a niche away from the vast and all-consuming Bollywood film industry.

Theoretically, these film-makers have strong export potential as they are outward-looking, open to alternative financing methods, including international co-production, and work with a range of non-Bollywood (non-song-and-dance) formats.

However, with India's export industry dominated by the Bollywood studios, they are largely invisible at an international level, beyond occasional festival play. An organisation called Independent Indian Filmmakers Worldwide (Iifw) was established last year, and has taken delegations to the last two Cannes markets, but India's indie film-makers face an uphill battle in accessing finance and international distribution.

The biggest problem is that as soon as independent film-makers have any success, they get sucked into Bollywood. "Bombay is an expensive city and in order to save themselves, young directors feel huge pressure to have their projects tailor-made to suit Bollywood," says film-maker and Iifw co-founder Aditya Bhattacharya. "But what Bollywood wants, the rest of the world is not so interested in."

India has always had so-called "parallel cinema" - films made in many Indian languages by auteurs such as Buddhadev Dasgupta and Adoor Gopalakrishnan - that play at festivals and on the arthouse circuit.

More recently, film-makers have emerged such as Murali Nair (Throne Of Death), Santosh Sivan (Before The Rains) and Nagesh Kukunoor (Dor) who manage to be relatively accessible while maintaining an independent voice. But they face a stark choice: either rely on finance from the mainstream Hindi-language industry for films that won't play overseas, or tap overseas finance for films that have a limited audience in India.

All this could change, however, now that India has a huge youth audience emerging, with disposable income and access to a growing number of multiplex screens. Already, a new generation of film-makers is starting to appear, with fresh ideas and a stronger awareness of both local and international audience taste.

"The market wasn't ready before because India was dominated by single-screen cinemas," explains Sanjay Bhattacharjee, CEO of start-up indie producer Phat Phish Motion Pictures. "But now with social changes and the growth of multiplexes, the audience is more open-minded. They want to see independent films in the cinema rather than picking up pirate DVDs."

However, if India is about to produce a wave of marketable independent cinema, Bollywood won't be far behind. Producer-distributor Eros International has already linked up with Mumbai-based White Feather Films which has launched an arthouse label. Leading studio Yash Raj Films experimented last year with Afghanistan-set drama Kabul Express and is moving towards making youth-oriented films.

Meanwhile, international sales agents occasionally pick up Indian films but have yet to make major incursions into the territory. One prohibiting factor is the fact that Indian films are made on tiny budgets which make it difficult for sales agents to make money on commissions.