Speaking at the Jaipur Literature Festival, the 60-year- old director said despite being a big budget and "completely hot button" film, she always wanted to make it.
Nair said she was moved by the narrative of the 2007 best-selling novel by Pakistani writer Mohsin Hamid.
"The Reluctant Fundamentalist is the hardest film I ever made because it took five years to finance that film. I have never had trouble raising money but this was a big film. Many stars, global appetite and many countries, it cost millions," she said.
"A completely hot button film. The story of a young Asian man post-9/11 who loved America and then gets disillusioned. That is an amazing story. What Mohsin Hamid wrote spoke deeply to me, but to finance that film was not easy."
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Noting that the struggle is to preserve the voice, Nair said instinct was the only thing that differentiated her from others - and each one of us from the rest.
The filmmaker revealed that she was approached for 'Harry Potter 4', but she turned down the offer from Warner Brothers as she had to focus on 'The Namesake', a film based on a novel of the same name by Indian-American author Jhumpa Lahiri.
"(Warner Brothers) approached me after the success of Vanity Fair. I turned it down for Jhumpa Lahiri's 'The Namesake'. I was deep into making 'The Namesake'. My mother- in-law had just passed away.
"I was a month away from shooting 'The Namesake' when they offered me Harry Potter. I asked my son what should I do, and he said to me: 'Mamma, many good directors can make Harry Potter, but only you can make The Namesake'. It was such a clear statement," she said.
"I grew up finding enchantment in small things and had an unscheduled life, not knowing exactly what to do... My roots are so strong that I do believe I can fly. They (roots) are not going to change no matter where I live. It is the rootedness that keeps me grounded," she said.
Talking about 'Salaam Bombay', a movie that catapulted her into limelight, Nair said it was the first Indian film to get international recognition.
Describing herself as an Iyengar Yoga enthusiast, Nair said the ancient Indian meditation practice kept her "sane, strong and flexible".
"It keeps me grounded or otherwise I will become a drug addict... The good thing about Yoga is that it teaches the art of resistance and surrender," she said.
Commenting about her ability to spot talent and getting the best out of them, she said, "I work with my actors with love, that is how I get the best out of them".