Little Terrorist, from director Ashvin Kumar, is the second Indian film to be nominated for an Oscar in the live action short film category.
The film highlights "our basic human instinct to give shelter"
Shot in the deserts of Rajasthan, Little Terrorist tells the story of a 10-year-old Pakistani boy, Jamal.
The cricket-mad youngster accidentally crosses the border with India, chasing a ball that strayed into Indian territory.
When border guards chase this "terrorist", Jamal finds an unlikely ally in a local Hindu teacher, Bhola.
Director Kumar believes he was one of many directors reacting to concerns stirred up by the terror attacks of 11 September 2001.
"Post 9/11, film-makers around the world have been trying to explore the word terrorist in their own socio-cultural context," he explains.
"I wanted to reflect this reality as I understand it, and through the experience of India and Pakistan.
"The film shows how, despite artificial boundaries and barbed wire, the basic human instinct to give shelter to an innocent remains - no matter how many lines are drawn between people."
With little cash to fund his project, Kumar's hopes rested on a short script with a strong message.
He posted the script on the internet, asking people to help him make the film even though he couldn't pay for their services.
Kumar was also keen to cast non-professional actors, a technique he admired in Iranian film.
"Around 15 people turned up from all over the world. I met most of them for the first time on location in Rajasthan," says Kumar.
Ashvin Kumar hopes to inspire other Indian film-makers
The central role is played by Salim, a young boy who was taken in by the Salaam Baalak Trust which rehabilitates street-children in the inner cities of northern India.
The Trust was established by film director Mira Nair after the success of her film Saalam Bombay, which highlighted the plight of street-children in Mumbai (Bombay).
"Salim has impressed a lot of people. Now I am writing a role for him in my next venture - a feature-length film called The Jungle," says Kumar.
It has been a while since India's last Oscar nomination in the short film category. An Encounter With Faces, by Vidhu Vinod Chopra, was India's first nomination in 1979.
Chopra did not win the award, but he went on to establish a successful career in Bollywood with blockbusters like Parinda and Munnabhai MBBS.
Kumar's film Oscar nomination has already attracted attention at home, and it has become the first short film to get a commercial release in India.
"Film-makers around the world do short films to make larger ones," says Kumar.
"I hope my film starts a trend encouraging alternate and experimental film-making. That way people can discover that there is more to Indian cinema than Bollywood."