Varma has announced the film on the Telugu film legend and TDP founder's last few years and it has not gone down well with the ruling Telugu Desam Party (TDP) as certain episodes in NTR's late life are historically uncomfortable for its current leadership.
The principal opposition YSR Congress is also caught in the controversy as the film is being produced by one of its leaders.
NTR's son and film hero Balakrishna had first announced a biopic on his late father. It was supposed to portray NTR's life from childhood to films and his ascent to the chief minister's chair. Varma's name had cropped up as the director of the film but nothing was made official.
"His (NTR's) story is like a Mahabharata and that kind of epic will have lots of chapters in it. We know of him when he was a superstar and when he rose up to be a great leader. But after she entered his life, there are only perspectives and conspiracy theories," Varma told PTI.
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"So I thought choosing that part of his life to film will give the most comprehensive understanding of the man in every which way. Also, it's the vulnerabilities in a man which will make one understand the person's true strengths," he said.
His critics had alleged that Parvathi became an "extra- constitutional authority" when NTR returned to power in December 1994.
NTR's son-in-law and current Chief Minister Nara Chandrababu Naidu led an internal coup in the TDP in August 1995 and gained power in September by dislodging him.
The legend, unable to get to terms with it, died in January 1996.
YSRC leader from Chittoor district, P Rakesh Reddy, is producing the film that is expected to go on floors in March next year.
"I have never been associated with any political party or ideology and so I will be partial only to the truth of the matter and, with regard to the producer Rakesh Reddy, it's only a coincidence that he happened to be a leader in the YSRCP," Varma said.
The TDP has warned that fans would teach a lesson to Varma if facts related to NTR's life were distorted.
"Varma always seeks to become a sensation through controversies. Everybody knows what happened in NTR's life after Lakshmi Parvathi's entry," TDP politburo member and minister Somireddy Chandramohan Reddy said.
"It will be better if Jagan (YSRC president) produces the film and Lakshmi Parvathi herself dons the heroine's role," Somireddy mocked.
NTR's son Balakrishna, who is now a TDP MLA, is yet to react on Varma's film proposal.