"Can you imagine that the film industry that makes the most number of films in the world, the only industry that has taken on Hollywood, is still called Bollywood, as if it is an offshoot, and we happily accept it? It's shameful."
Tuli, who is creating an arts institute in the country, said Indian filmmakers had concentrated so much on basic entertainment that they failed to educate their audience about the craft and intellectuality of cinema.
"Where is the discerning audience? And where are the products to feed them? Indian cinema doesn't even constitute one percent of the world market, it's all about domestic and NRI audience. Where is the world appreciation and accolades?" asked Tuli.
"Where are we picking up awards in Cannes and Venice and Berlin? We have remained in our little well and that needs to change if we want to bring respect and admiration for Indian cinema around the world."
Tuli, who is gathering film memorabilia and artefacts for his institute, said India has failed to preserve its film legacy and build an intellectual appreciation of cinema.
"There is a false sense of complacency in the film which we cannot tolerate any more," said Tuli. "The fact that most films flop points to the fact that most of them are economic failures, as well as failures in terms of entertainment.
"They obviously fail to entertain the public, that's why they are flops. Then the financial infrastructure is a mess, there's so much black money all around. There is so little respect for the art form," said Tuli, who has penned some of the most detailed art books in India and whose Osian's foundation runs the successful annual Cinefan Asian Film Festival.
He said what Bollywood was just constantly flogging a star system and failing to look beyond that.
"We have these few stars, whose films give a good initial and, then, by the time the reviews are out in two or three days, the money has been recovered and that's it.
"So no one feels the need to push the envelope - they just keep alive that 'star power' myth and the myth that Bollywood is flourishing. A false sense of success."
The other problem, as Tuli sees it, is that lack of appreciation for cinemas from other parts of the world in India.
"What do we know about the kind of cinema that is being made in other parts of the world? Algerian cinema? Taiwanese cinema? Nothing, and that makes our view really narrow and restricted."
To change all that Tuli will soon enter film production and probably soon make a film himself. "Indians have a true love for cinema; we have to expose them to the best.
"In two years, we can be at par with a Cannes and a Berlin."