Indian films, including "Rang De Basanti", the biggest hit of the year so far in India, will be exhibited at the 12-day festival that runs from May 17, although none are in the running for awards.
Bollywood producer and director Karan Johar, who plans to showcase his latest film "Kabhi Alvida Na Kehna", said he hoped to tap the huge European market.
"I feel that the Cannes Film Festival will give me an opportunity to exhibit my film to European audiences. It is a huge market which I feel I have not tapped properly."
Suneel Darshan, a Bollywood producer and director said his films had done well in Britain, where there is a large Asian population and following of Hindi films.
"The world is slowly waking up to Bollywood cinema and I don't want to miss the bus. I want to give the Europeans a taste of traditional Indian cinema through this festival," he said.
Bollywood actress Mallika Sherawat and former Miss World-turned-actress Aishwarya Rai have created a stir with their appearances at Cannes in the last two years.
But this year, Bollywood actress Preity Zinta will make an appearance along with actor Ajay Devgan who will promote his latest film "Omkara", loosely based on Shakespeare's Othello.
The Indian film industry is the largest by volume in the world, producing more than 1,000 movies in 2005 but accounting for only one percent of global film industry revenues.
A 2005 industry report said overseas markets were an "untapped opportunity" with foreign box office receipts accounting for less than 10 percent of Indian film industry revenue.
The report blamed poor dubbing and subtitling, ineffective marketing and low investment for the industry's failure to make more of a mark overseas.