I want to make serious, passionate cinema that will get an ordinary audience, not an arty, intelligentsia crowd," says India-born producer-director Mira Nair. So, by her own yardstick, Nair's Salaam Bombay! is something of a disappointment. True, her first nondocumentary feature is winning sellout audiences of "ordinary" people across the U.S. (by next week it will have opened in 40 cities), but it has earned raves from the dreaded arty crowd as well. Last August, Salaam Bombay!, a bleak yet exotic and lively tale of the city's street children, copped top honors at the Montreal Film Festival. Three months earlier, in Cannes, it had won both the coveted Camera d'Or as best first feature by a new director and the Prix du Publique, awarded by the Cannes public to the most popular film in the festival. To Nair, 31, the prizes were gratifying, but the standing ovation at Cannes meant more. "I just stood there in tears, totally paralyzed," she recalls.

The idea of making a film about street kids first came to Nair in 1983, when her Bombay taxi was suddenly surrounded by hordes of youngsters trying to cadge a few rupees. Three years later she and co-scriptwriter Sooni Taraporevala, a Bombay native whom Nair met when both were undergrads at Harvard, began research, immersing themselves for two months in the lives of a band of street children. They were so intrigued they decided to gamble by casting 17 of the urchins in the film. "They are both children and ageless," says Nair. "I couldn't find that quality in a child actor."

With the help of New Delhi-based British theater director Barry John, the Bombay street children were launched on a seven-week crash course in acting. Indian assistant director Dinaz Stafford, a child psychologist, helped the kids memorize their lines by using comic-book style drawings of each scene. "Living on the streets often involves a kind of acting, so a lot of the children already exhibited panache, a flair. Shafiq Syed is a natural," Stafford says of the film's preteen star, who plays an Indian Oliver Twist making his way among the addicts, pimps and prostitutes of the city's red-light district. The children were paid $2 a day during the workshop but received up to a few thousand dollars for the filming, depending on their roles. The director disclaims any altruism in her casting. "I'm no Mother Teresa," says Nair, whom the street kids dubbed Danger Director and Tough Sister. "We did not offer them any illusions, we did not try to reform them. We addressed them as human beings."

Working on a budget of $960,000—less than the cost of some U.S. TV commercials—Nair made her feature in just 52 days. "It was probably the most difficult shoot I'll ever do," says director of photography Sandi Sissel, who lost 32 lbs. in the process. "The brothel area in Bombay is run by the Indian equivalent of a Mafia. There were moments when we were terrified." The small budget also left little time to haggle about conditions. Nair paid one madam $50 for permission to shoot from the window of one of her brothel's tiny rooms, but when the cameraman arrived, the space was already occupied by two whores and their client. "The madam threw a curtain over them," Nair recalls, "and we handed a camera over these three pairs of legs sticking out at the end."

The grim childhoods portrayed in Salaam Bombay! contrast starkly with Nair's comfortable upbringing in Orissa in eastern India. The youngest of three children—her father is a retired civil servant, her mother a part-time social worker—Nair spent 1½ years at the University of Delhi before transferring to Harvard on a full scholarship in 1976. While at Harvard, she began making the first of four documentaries about her country, and she also met photography teacher Mitch Epstein, now 36. They were married in 1981, and he has worked on each of her films since then. The couple now lives in a converted loft near Manhattan's Bowery, a neighborhood she finds even harsher than many of those in her film.

This month Nair will be back in India for the Bombay opening of Salaam, but she says that the movie has already had an impact on a few of the city's homeless children. Since filming ended, several of her child actors have gone back to their homes and others have returned to school or gotten jobs. As for Shafiq Syed, he is now a full-fledged member of Barry John's New Delhi theater company.

—Bonnie Johnson, and Michael Small in San Francisco