"'Bend It Like Beckham' touched on the subject by asking the right questions on tradition and modernity in India," says the Labour peer who was knighted in 1995.
Puttnam, who is in India in his avatar as an educationist - chancellor of the University of Sunderland in Britain - is equally interested in seeing Bollywood succeed globally.
"Take essential features of Bollywood like the use of music, high energy levels and attitude and hybridize them with global cinema. The real challenge is to translate the style, the flair and energy of Bollywood into global idiom."
Hailed as the savior of commercial British cinema, he has made hugely successful films like "The Mission", "The Killing Fields", "Local Hero", "Chariots of Fire" and "Midnight Express".
"All are about men under pressure and how men handle different kinds of crises and the kind of choices they make," says Puttnam, who confesses to finding women mysterious. "I don't understand women. I could never understand motivations of women."
Puttnam is upbeat about the global odyssey of Indian cinema, but he is not afraid to point the pitfalls that threaten this journey.
"The problem with the current Bollywood is that it's essentially an escape. Films have to ask the real 21st century questions to be engaging and relevant," says Puttnam.
"There are two kinds of Bollywood - the Bollywood that people like me know is represented by films like 'Monsoon Wedding' and 'Lagaan' and the other Bollywood is the mainstream Bollywood that's very popular in India," he says.
"Unless India refines and develops mainstream Bollywood, this other Bollywood known in the West will remain a passing fad," he warns.
"Indian cinema is much greater and deeper than just Bollywood. It will be successful on the global stage only when it recovers its ability to tell stories simply and directly," says Puttnam, who vividly remembers the unique ambience of Satyajit Ray's films like "Pather Panchali" and the Appu trilogy that still haunt his imagination.
Puttnam briefly flirted with Hollywood in the mid-80s and became the first non-American to head Columbia Pictures (1986 to 1988). He also tried hard to make a film based on Vikram Seth's "A Suitable Boy," but the project stagnated due to a severe fund crunch.
Intellectually strong and emotionally subtle cinema is what excites Puttnam and this is where the future of Indian cinema lies, he says.
"In the US, there are a number of edgy, questioning films being made like 'Garden Estate', 'Sideways' and 'The Assassination of Richard Nixon' that ask crucial questions like where is America going."
"The great thing about cinema is that it stimulates a big national conversation. It resonates with something deep within and stays with you for a long time. Indian cinema has to ask the right questions and bottom it out intellectually for itself," says the master filmmaker, who turned educationist to save himself the old age blues that hit a person in what he calls "this young man's profession".