Indian-born Canadian director Deepa Mehta's "Water", a film on the plight of Hindu widows in the India of 1930s, has lost out to Germany's "The Lives of Others" for an Oscar.

A dazzling first feature from German writer and director Florian Henckel von Donnersmarck, "The Lives of Others" won the Academy award for the best foreign-language film at a glittering ceremony in Los Angeles Sunday.

But as The New York Times said, "Win or lose tomorrow (Sunday) night at the Academy Awards ceremony in Los Angeles, one contender - Deepa Mehta's 'Water', a nominee for best foreign-language film will already have scored its greatest triumph simply by existing."

In January 2000, rioting Hindu nationalists in India shut down her sets after she had spent just two days filming her story of an eight-year-old widow shunned by traditional society in the holy city of Varanasi, noted a curtain raiser on the awards.

Asked by local officials to leave, Mehta began again five years and two films later, this time in neighbouring Sri Lanka, the daily recalled, describing it as an "Indian film with roots so deep that it defies borders".

In the course of this film's sometimes harrowing trip to the screen - it took 11 years in all - she weathered death threats, lawsuits and an unexpected reconciliation with a distant daughter.

"So an Oscar, if not exactly anticlimactic, would not be the most extraordinary thing to have come Mehta's way," the Times said.

"I just feel that may be if a film has gone through this type of journey, the payoff has been so generous," the daily quoted Mehta as saying in a recent interview, describing "Water" as "one of those little films that's blessed".

"It's not simply an issue film," said novelist Salman Rushdie, who has championed "Water" since its inception, according to the Times. "What makes the film work is the insight into the characters and the psychological impact of the characters."

"Water" also benefited from a change in the Academy of Motion Picture Arts and Sciences rules this year that allows a foreign-language entry to be in a different language from its country of origin, as long as the "creative talent of that country exercised artistic control".

Mehta and producer David Hamilton are Canadians, and the film qualified as Canada's official entry. India, where Mehta was born and lived until 1973, "would never have put me up", she said.

"Water" has been sold in 57 countries and released in 25, with close to $14 million in worldwide ticket sales. It is finally scheduled to open theatrically in India on March 9.

"Water" had survived one preliminary cut and a secondary trim to nine finalists before joining "The Lives of Others", "Pan's Labyrinth" (Mexico), "Days of Glory" (Algeria), and "After the Wedding" (Denmark) among the top five nominees.

"The Lives of Others," a captivating and wrenching film depicts with a rigorous, straightforward focus on the way the Stasi monitored and tried to control speech and even thought in the German Democratic Republic in 1984.

It recounts how a Stasi captain, Wiesler, eavesdrops on a playwright, Dreyman, and his actress girlfriend. As the rigid bureaucrat makes an imaginative excursion into their lives, his sense of injustice grows, spurring a rebellion that may be an even more creative act than Dreyman's writing.

One of the other foreign films, Susanne Bier's "After The Wedding", also begins in India, where a Dane named Jacob (Mads Mikkelsen, who plays James Bond's main adversary in "Casino Royale") runs an orphanage. Soon Jacob returns to Denmark, where he becomes entangled with his old lover and her family. The film only glances at the repercussions on his work in India.

"Pan's Labyrinth," the Mexican entry from the amazing writer and director Guillermo Del Toro, portrays the brutal repression of Franco's Spain in 1944 in an inventive mix of fantasy and realism.

"Days of Glory", the Algerian Oscar entry from the French-Algerian director Rachid Bouchareb, shows North African soldiers in the World War II fighting for France, a mother country whose military commanders treat the colonial soldiers with contempt. Dealing with race and the underclass in the military, the film tackles issues that plague even enlightened armies today.