Kapur has worked on both Bollywood and Hollywood movies in the past, including his Oscar-nominated biopic of Elizabeth I, The Golden Age, starring Cate Blanchett.
His latest film Paani is a science-fiction romance set in the future when the earth's water supply has run out.
Kapur and producer Aditya Chopra are said to have been in talks with young British actress Emma about taking a starring role.
An insider said: "The casting decisions are being kept secret. A huge announcement is planned soon."
John Travolta has also been linked to the film.
The Pulp Fiction star attended the International Indian Film Academy awards last month where he revealed: "I have been offered a film that I am considering doing... I believe it is an honest Bollywood film and it is called Paani, by Shekhar Kapur. He has asked me to be a part of it.
"I have known Shekhar for a while now. Even though the script does not have it, Shekhar said he will put in a song to make it truly Bollywood. I am open to working in Hindi films if I like the story and my part."
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