Canada-based Indian filmmaker Deepa Mehta's visually stunning "Water" is in fierce Oscar competition for the best foreign film against Mexican director Guillermo del Toro's fantasy flight "Pan's Labyrinth".

"There is fierce competition between 'Water' and 'Pan's Labyrinth'. The Canadian and Mexican films are battling it out for the Oscar Academy award," an Academy member told www.hollywood.tv.

The question is not if but how "Water" will win.

"Water" ranked sixth of the overall top-grossing 15 foreign language films in 2006, making $3.3 million.

When "Water" first opened in April 2006, it played in only five US theatres. By October, it was in 91 theatres. "Pan's Labyrinth" ("El Laberinto del Fauno") by contrast, opened in 17 theatres just before new year and, according to Reuter's, has already raked in $40 million.

But when it comes to winning an Oscar, these statistics are of little consequence. In the end, deciding which film wins comes down to the voting members.

But just to get a nomination, the distributors wage an aggressive ad campaign months in advance. Picturehouse, which was formed two years ago by New Line Cinema and HBO Films, upped the ante this year, giving "Pan's Labyrinth" a better chance of winning an Oscar by having it nominated for screenplay, art direction, cinematography, original score and makeup.

On the other hand, other than campaigning for best foreign film, Fox Searchlight has done little to promote "Water" in any other category, let alone for an Oscar in cinematography, given the exceptional camera work by Giles Nuttgens, who also shot Mehta's other two films - "Earth" and Fire".

So if "Water" doesn't win the Oscar for best foreign film, it will have no other opportunity to play up its other strengths. A loss for "Water" would be an even greater shame as many of Hollywood's elite filmmakers are quite impressed with it.

Legendary actor and multiple Academy award winner Clint Eastwood said: "Cinematically, India produces some of the best films in the world. I am very impressed with the colours, music and cinematography. It's only a matter of time before the Indian film industry goes international and is on par with Hollywood."

US producer Jerry Bruckheimer said: "Indian movie producers need to make their products more international-oriented so that they appeal to people of all backgrounds and genres worldwide. Once they take this action, the Indian film industry will attract a global international cinema audience."

"Additionally, Indian movie producers must increase their print and advertising budget," said Bruckheimer, whose credits include "Pirates of the Caribbean", "Black Hawk Down" and "Pearl Harbor".

He added: "The only way for them to do this would be by raising substantially more monies for marketing. The reason why it is so expensive to produce movies in Hollywood today is because of the exorbitant marketing budgets associated with the movies."

It's interesting that India, which allowed its rightwing extremists to hound Mehta out of the country by torching her sets and burning her effigies, forcing her to film it in Sri Lanka, is now brimming with pride that an Indian film is up for Oscar consideration.

But "Water" is a Canadian entry and its first foreign film nomination since winning the Oscar for "The Barbarian Invasions" in 2003. If the film wins, Canada will be celebrating. India, on the other hand, will have to settle for a vicarious victory.

Twice before, in 2001 with "Lagaan" and again in 2005 with "Paheli", the Indian distributors SET India and Eros, respectively, revelled in the fact that their films had been nominated, but did little to promote them.

Financially, their box office numbers were abysmal. "Lagaan" played in 34 theatres for less than a month and made under $1 million. "Paheli" played in 68 theatres for less than a month as well and reaped only $1.4 million in revenue. The nominations were simply treated as an icing on the cake and regarded as nothing more.

The Indian distributors fail miserably in the area of marketing. Outside Middle Eastern countries and the NRI market, Indian films do not have much export value.

Because of the success of such films as "Moulin Rouge", which borrowed heavily from the cinematic extravagance of Bollywood, or the "Bourne Supremacy", which used Goa as an exotic locale, India and Hollywood seem to be on the brink of participating in a highly lucrative filmmaking partnership.

But Indian directors, producers and distributors have to make the first move. They need to set up shop in Hollywood and not only fund those films that would appeal to the international market, but also be willing to spend their own money on the advertising and promotion necessary to make a film a success and not rely on Hollywood studios.