"This film will help bridge the gap between people of the Indian mainland and those from the north-eastern states," Mary Kom told the BBC.
The five-time world champion is from the remote northeast state of Manipur.
Bhansali, who has been planning the film for a year, described the boxer as an "inspiration to every Indian woman".
"I am very impressed with the way Mary Kom is leading her life with so much conviction and courage. We'll start working on the film very soon. I haven't decided on who will play her role," Bhansali told the BBC.
Recently, thousands of north-eastern people fled the Indian cities of Mumbai, Bangalore and Hyderabad fearing reprisal attacks in the wake of ethnic clashes between Bodo tribes and Muslims in the north-eastern state of Assam.
The boxer says she has been worried about her relatives and friends living in Bangalore and "could not properly sleep at night when this exodus was taking place".
The mother of twin boys feels that Bhansali's film on her will help clear the air because "our people look different but they are Indians. We have the same passions when the country is involved".
Bhansali's assistant Omung Kumar, who researched Mary Kom's life and wrote the script, will direct the film.
But will it be possible to screen the movie in the boxer's home state Manipur, where separatist rebels have imposed a ban on Bollywood films?
"I hope nobody will object to a film if it centres on my life story, my struggles to become a boxer," Mary Kom said.
India's thriving film industry has rarely picked on themes from the country's long-embattled north-eastern states and the few films that have been made have focused on the separatist insurgencies and India's counter-insurgency efforts in the region.
Indian Olympics bronze medallist, boxer MC Mary Kom, has welcomed a film that Bollywood director Sanjay Leela Bhansali wants to make on her life.