Hollywood and Bollywood both love a good romance. This month the pair celebrated perhaps their flashiest wedding yet - the union of Steven Spielberg, the legendary director, and Anil Ambani, the billionaire Indian industrialist.

Under a deal hammered out in Los Angeles and New York, Reliance Big, Mr Ambani's film unit, will provide $550million (£298.9million) in equity funding to DreamWorks, Mr Spielberg's studio. JPMorgan Securities is leading a bank syndication for up to $700million more. The cash will be used to recreate DreamWorks as a private company, separating the studio from Viacom's Paramount, which bought it for $1.6billion in 2006.

Mr Spielberg's relationship with Paramount was notoriously rocky and Mr Ambani has long displayed a taste for things cinematic (his wife is a former Bollywood starlet) - but the Ambani-Spielberg pact is also an indicator of how, in the global film industry, the pendulum is steadily swinging East.

By bankrolling Mr Spielberg, the man behind Jaws and Indiana Jones, and taking a 50 per cent share in DreamWorks, Mr Ambani has confirmed his seat at the movie industry's top table and India's status as a global power in film finance. In May, with much of America's film financing system paralysed by the credit crunch, the Indian billionaire announced a $1billion foray into Hollywood through tie-ups with A-listers including George Clooney and Brad Pitt.

Given the potential of the Indian market - Bollywood pumps out more than a thousand films and sells three billion cinema tickets a year - it is not surprising that money has also flowed from Los Angeles to India and many of the West's savviest stars now appear transfixed by the sub-continent. Last month, Snoop Dogg became the first hip hop artist to contribute to a Bollywood movie when he collaborated on the soundtrack to Singh is Kinng, the hit comedy. “I'm coming to take over Bollywood,” the veteran rapper promised. “This is just the beginning.”

Snoop Dogg is one of “gangsta” rap's most successful businessmen and India is one of the few territories where hip hop has failed to make a breakthrough. Yet the potential is there - about 600 million Indians are under 25 years old and most love music and films. Much of India's middle class revels in conspicuous consumption of the type championed by hip hop, something neatly illustrated in the Singh is Kinng video when a turban-clad Snoop Dogg raps about Ferraris, Bugattis and Maseratis.

Aware of India's potential, Warner Brothers, Sony and Viacom have earmarked funds to develop Indian films. In February, Disney invested £100million in UTV, an Indian media conglomerate and one of Bollywood's leading producers - the largest such cash injection by a Western company.

“They felt they were buying into a company that understood the terrain of Asia very well, but yet had a very global perspective,” Ronnie Screwvala, UTV's chief executive, said.

Mr Screwvala is one of a new breed of moguls bringing “Hollywood-style thinking” to Bollywood, which is only discovering the earnings power of merchandise and DVDs. For decades, Bollywood was fuelled by what Mr Screwvala euphemistically dubs “easy money” - underworld cash fronted by gangsters based in Bombay and the Middle East. During the long period when Indian banks refused to grant loans to filmmakers, these financiers regularly stepped in, attracted by the glamour of the silver screen and the opportunities to extract exorbitant rates of interest.

Under the wing of men such as Mr Screwvala, it seems that Bollywood has moved on. UTV's money comes from the squeaky-clean House of Mouse and - after a $70million float of the group's film unit on AIM last year - London's capital markets.

But not everybody is entirely happy. Shares in UTV and Eros, another Bollywood film group that listed on AIM, have fallen over the past year.

Moreover, an influx of cash may also influence artistic judgment. Shahrukh Khan, India's most bankable star, said that that he turned down $125million for a five-picture deal.

“When people offer too much money, I refuse to hear the script,” he told reporters. “Because money is a very strong force. I might start liking scenes which I didn't before, because I can see extra zeroes behind them.”

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