India turns out about 1,000 films in 12 languages each year. No Indian film has ever won an Oscar, although Mother India and Lagaan have been nominated.
Bachchan, visiting Britain to receive several awards, told a news conference at the Houses of Parliament in London he did not believe that an Indian film winning an Oscar was the "ultimate recognition for any great film" and added that it was offensive to suggest that.
"I do believe that Indian film has its own exhibition," Bachchan said, referring to the International Indian Film Academy's annual awards. "Whereas we respect the Oscars and what they are, our creativity is the best," he added.
The Indian film industry, which makes three times as many films a year as Hollywood, has captivated cinema goers around the world with its escapist musical extravaganzas.
With its centre in Mumbai, Indian's film industry is popularly known as Bollywood. Bachchan doesn't like the term.
He welcomed films that married Western and Indian cinema such as 2004's Bride and Prejudice, a co-production featuring Indian and Western actors.
"Any kind of marriage is going to be good when creative interests are common," Bachchan said.
"I do believe that if the United Kingdom wants to make a film with India, there can only be benefits and vice versa."
Bachchan said that, although he had never appeared in any Hollywood film, he would certainly consider roles from the West.
Known affectionately as the "Big B", Bachchan has acted in over 150 films, playing rebels, smugglers and vigilantes in the 1970s and 1980s. He now plays more mature roles, many written specially for him.
He was voted the most popular screen and stage icon of all time in a 2002 BBC Online survey, ahead of British legends Laurence Olivier and Alec Guinness.
Bachchan's 2005 hits -- Black, Waqt, Sarkar and Bunty Aur Babli -- together grossed nearly 1 billion rupees.
Bachchan, 63, was visiting Britain to receive an honorary doctorate from a university in Leicester and awards for his four decades in film work and his humanitarian work, including his role as a goodwill ambassador for UN children's agency UNICEF.
On Thursday, the actor also received the rare accolade of having more than 60 British lawmakers sign a parliamentary motion in his honour.