The thriller, featuring actors like Jaideep Ahlawat, Manoj Bajpayee and Raima Sen, is about the coal mafia in Dhanbad. It will compete with movies like Korean animation project "The King of Pigs" and Australian film "Lore",
"These are the films - selected from the best work by current filmmakers around the world - that provoke, court controversy, broaden our understanding of the world and say important things in innovative ways," read the official website.
The Sydney Film Prize is presented in recognition of the most courageous, audacious and cutting-edge cinematic creations.
But before the Sydney film fest, both parts of "Gangs Of Wasseypur" will have their world premiere at the forthcoming Cannes International Film Festival, scheduled May 16-27.
They will be showcased at the fest's Directors' Fortnight, a non-competitive section.