The movie, which won three honours at this year's National Film Awards, has been produced by actor Dhanush.
"We selected 'Visaranai' on the basis of concept, treatment and technique. There were other good films like 'Sairat', 'Bajirao Mastani', 'Sultan', 'Fan', 'Airlift' and 'Udta Punjab'. There was a Bengali film also in the race. The decision was unanimous," filmmaker Ketan Mehta, chairman of the selection committee of Film Federation of India, told PTI.
There were total 29 films in the competition, FFI secretary general Supran Sen said.
"Visaranai" is based on the novel "Lock Up" by M Chandrakumar.
Featuring Dinesh Ravi, Anandhi and Aadukalam Murugadoss in the lead roles, the film deals with police brutality, corruption, and loss of innocence in the face of injustice.
"I am happy. Thank you," Vetrimaaran said when contacted.
"Visaaranai #Anbum #amaithiyum malarathum ('Let love and peace bloom')," Dinesh tweeted in Tamil.
Pandi (Ravi), Murugan (Murugadoss), Afzal (Rathnasamy), Kumar (Pradheesh Raj) are homeless Tamil labourers who are working in Andhra Pradesh.
Their life takes a turn for worse when they are caught, beaten and tortured brutally in police lock-up for a theft they did not commit, due to police's need to close a robbery case they are dealing with.
"Visaranai" is the ninth Tamil movie to represent India at Oscars. The last Tamil film to be submitted as India's oscar entry was Kamal Haasan's "Hey Ram" (2000). Other submissions were "Nayakan", "Anjali", "Deiva Magan" and "Jeans" among others.
At the 63rd National Awards, "Visaranai" won awards in the categories-- best feature film in Tamil, best supporting actor for Samuthirakani and best editing for Kishore Te.
The film premiered in the Orrizonti (Horizons) section of the 72nd Venice Film Festival, where it won the Amnesty International Italia Award.
India has never won an Oscar in the best foreign film category. The last Indian film that made it to the final five list was Ashutosh Gowarikers "Lagaan". "Mother India" and "Salaam Bombay" are the other two Indian movies to have made it to the top five.