A family saga that crosses continents from New Delhi to New York has won a leading literary prize.

Akhil Sharma picked up the £40,000 Folio Prize for his book, Family Life, beating Irish novelist Colm Toibin and Scottish writer Ali Smith in the process.

Sharma, who was born in India but emigrated to the United States, collected his award at a ceremony at the St Pancras Renaissance Hotel in central London.

Writer William Fiennes, who chaired the judging panel, said: "From a shortlist of which we are enormously proud, Akhil Sharma's lucid, compassionate, quietly funny account of one family's life across continents and cultures, emerged as our winner. Family Life is a masterful novel of distilled complexity: about catastrophe and survival; attachment and independence; the tension between selfishness and responsibility. We loved its deceptive simplicity and rare warmth. More than a decade in the writing, this is a work of art that expands with each re-reading and a novel that will endure."

The novel, described as "heart-wrenching and darkly comic", is the story of one family's journey from India to a new life in the United States. It is Sharma's second novel and took him 13 years to complete.

The decision means Smith has now lost out on three of the big literary prizes in just six months, having also been shortlisted for - but failed to win - the Man Booker and Costa Book Award.

Also shortlisted were Canadian-born Rachel Cusk, American novelists Ben Lerner and Jenny Offill, Canadian Miriam Toews and Kenyan writer Yvonne Adhiambo Owuor.

The prize, launched last year, is unashamedly high-brow and the team behind it intend it to be seen as one of the big four along with the Booker , the Costa and the recently renamed Bailey's Women's Prize for Fiction - all of which are longer-running and better known.

Its co-founder Andrew Kidd said: "In this second year of the Folio Prize, our five judges have again lived up to every expectation, selecting from a glorious shortlist a heartbreaking and funny novel whose astonishing power is achieved in constantly surprising ways. Family Life is already a critically acclaimed bestseller in the US. We are delighted that the Folio Prize will now help it to find many more readers, both in the UK and around the world."

American short-story writer George Saunders won last year.