Do we ever make good movies about the glories of Indian culture? All we make is overacted song and dance routines that pander to the lowest common denominator, or jingoistic nationalism with songs in between. What's the great film that you saw recently and feel should get an oscar? Rang de basanti, india's official entry? It is mediocre at best, in comparison to The departed or even blood diamond (which is a decent film, but not great).
In general, Oscar nominated movies are dark and brooding. Even films like life is beautiful is quite dark, though funny at the same time. That's the kind of movies the academy likes... Out and out commercial films like Matrix, Spiderman, etc will never win the awards...
The problem is in part due to the censor board and also due to India's intolerance to an opposite viewpoint. Plus, most of the viewers like this kind of cinema as against social dramas. (Most ppl tell me that they go to watch films to get entertained, not feel depressed.)
Regional cinema (esp in the communist states), inspite of poor funding, is way way better than crappy bollywood.