Organisers said that some 250 celebrities and artists from the Indian film industry have gathered in the capital Kuala Lumpur for the event.
On Friday, Malaysian government ministers and artists will pit themselves against the Bollywood stars in a celebrity football match, followed by a charity dinner.
The highlight of the schedule is the awards function on Saturday, with performances from Shahrukh Khan, Salman Khan, Abhishek Bachchan, Priyanka Chopra, Katrina Kaif and Ameesha Patel.
Baabul, which has an all-star cast including Amitabh Bachchan, Hema Malini, Rani Mukherjee and John Abraham, is a social drama covering the topic of widow remarriage.
Tourism Malaysia director general Mirza Mohammad Taiyab said that India is Malaysia's seventh-biggest tourist market and that the staging of the film awards here was designed to draw more Indian tourists to the country.
"It is our venture into hosting major film award events. This is an attempt for us to gather a few top stars all together... to raise interest for more people to come and visit our country," he told the press conference.
In 2005, 225,000 Indian tourists visited Malaysia, a 27 percent increase from a year ago.