Bollywood screen idol Amitabh Bachchan urged India's huge film industry on Friday to consider staging a prestigious awards ceremony in Pakistan, as hopes of improved ties between the two rivals grow.

The veteran film star said he would ask the International Indian Film Academy (IIFA) to consider holding its annual awards ceremony in Pakistan. He is a member of the IIFA's advisory board and the academy's global ambassador.

"I am a member of the advisory board and I would most certainly bring this up at some stage that we should hold an IIFA in Pakistan," said Bachchan, who has starred in 110 films and is an idol to Bollywood's hundreds of millions of followers.

The Indian film industry, which makes three times as many films a year as Hollywood, has captivated cinema goers around the world with its escapist musical extravaganzas.

Actors, producers and directors believe Bollywood, followed closely in Pakistan as well as India, has the power to help bring the divided countries closer together amid hopes of improved relations between the neighbours.

"An imaginary line is dividing two countries and creating a lot of hostility. We need to stop that. Everywhere in the world now barriers are being removed and people are coming together," Bachchan told Reuters in an interview.

The first bus service from Kashmir to Muzaffarabad in more than half a century opened this week, the latest sign of thawing relations between New Delhi and Islamabad, who have fought two wars over the disputed territory.

"I hope that we can, as a result of film making and exchange of culture and films and events, be able to propagate peace," he said on a visit to the Netherlands, which will host this year's IIFA awards ceremony in June.

South Africa and Singapore have also staged the event in the past few years.

Asked if it would be feasible for Indian film accolades to be handed out in Pakistan as early as next year, Bachchan replied: "Certainly. Why not? We'll certainly look into it. We can work towards that."

A Bollywood legend, he stars in a new film tipped by the Indian media as the country's best ever bet for a foreign film Oscar. The film Black is inspired by the life of legendary deaf and blind writer Helen Keller.

No Indian film has ever won an Oscar, although India turns out about 1,000 films in 12 languages every year. Nearly 80 per cent of the dialogue in Black is in English.

"I think the concept of Oscars is for American cinema. I think they are gracious enough to include a category where they acknowledge cinema from other countries as well, India included.

"We haven't had the kind of recognition or perhaps have not made a product which is appreciated in the Oscars. But hopefully we will one day," Bachchan said.

"We can't expect to win all the awards in the Oscars. It's an English language medium and Hindi cinema is Hindi cinema, so it will have limitations."