The movie, currently in UK cinemas, is set in the final days of Indian independence in August 1947 and traces the lead up to the Partition of the country.
It will be released in India in August this year to coincide with the 70th anniversary of India's independence.
"On my travels around Britain, it has been heart-warming to see how the film has been very cathartic for many people.
"The museum is also a befitting tribute to all who suffered in 1947 and are still haunted by the tragedy of Partition," said Chadha at an event organised by the Partition Museum in the UK Parliament complex on Tuesday.
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"This is a people's museum, being set up entirely through generous donations. Already most of the Partition survivors are in their 80s and 90s and the museum team is working hard to collect their memories swiftly," said Kishwar Desai, chair of the Arts and Cultural Heritage Trust.
"We urge all Partition survivors and eyewitnesses and their families to come forward to join this movement of educating the world about a terrible tragedy that has gone unrecognised all these years," she added.
It was inaugurated through a curtain raiser exhibition in October 2016 and will be completed later this year.
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