"China has bigger population than India but has less films produced; China however has produced more world acclaimed films that are also available in Chinese and world wide audience with sub-titles."
Uh, this is more RECENT acclaimed Chinese films. This, as I implied in my post ("we just don't know about it"), is a matter of marketing and perception. China has some interesting films, certainly, but India has been more active at it and has produced more great filmmakers--not just the known Satiyajit Ray, but the lesser known and equally great Ritwik Ghatak, Guru Dutt, Bimal Roy, Raj Kapoor, Mrinal Sen...the list is enormous, and definitely longer than the Chinese list.
Ask anyone familiar with world cinema. He can set you straight on this point.