Gustavo, whose credits include Ang Lee's Brokeback Mountain, Brad Pitt starrer Babel, Motorcycle Diaries and Amores Perros, has been in Mumbai for the last four days and Rao has been playing host to the musician at her Bandra pad.
The 57-year-old composer won the Academy Award for Original Music Score for Brokeback Mountain in 2005 and the Academy Award for Original Music Score for Babel.
Rao, who has previously assisted Ashutosh Gowariker in Laagan and Swades, is leaving no stone unturned to make her film worldclass.
The debutant director wants Gustavo to compose the soundtrack and background score of Dhobi Ghat.
When Rao narrated the film to the musician, he expressed a desire to visit Mumbai since the city plays a character in the film.
"Kiran has been taking the musician all over Mumbai to visit certain locations and Gustavo is certainly enjoying Mumbai food. Gustavo is a director who works very rarely with anyone and Kiran is extremely delighted when he gave a go-ahead for 'Dhobi Ghat', " a source said.
When contacted Rao confirmed the news, saying, "Yes Gustavo is in town."
Dhobi Ghat is expected to hit theatres later this year. The shooting of the film is complete and currently is in the post- production stage. Aamir plays the role of a painter in the movie, who lives and works in his tiny studio-apartment in a noisy and congested Mumbai neighbourhood.