So far, most work Indian companies have done is midlevel rotoscoping and compositing, which allow filmmakers to blend complex shots.

For "Spiderman 3," Tata Elxsi VCL cut out studio stunt shots of Spiderman and sent them back to California, where they were fit into urban landscapes so the hero appeared to be swooping in death-defying arcs from one tall building to another.

Khandpur said smaller production companies have been more willing to send over complex shots. For "One Night with the King," a 2006 movie about the biblical figure of Esther, the young Jewish woman who became the queen of Persia, VCL used computer software to create and people entire landscapes, filling the land with castles, waterfalls, and hundreds of horsemen, elephants and villagers.

In the last few years a string of acquisitions and new ventures have started to build the relationships and expertise India needs to become a more of a destination for such higher-end work.

Two old Hollywood hands recently opened visual effects companies in Mumbai: Geon, founded by "The Lord of the Rings" producer Barrie Osborne, and EyeQube Studios, headed by Charles Darby, whose credits include "Titanic" and the HBO series "Rome."

Darby set up EyeQube with backing from the UK's Eros International and plans to release his first film "Aladin" – an effects-driven live action film featuring top Bollywood talent – in July.

He hopes it will be his calling card in the West.

"Instead of smiling at India and saying it's not good at special effects, they'll say, 'Hey look at that...Where did that come from? Hell's teeth! It came from India," Darby said.

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