"Indian" is not just an national identity but also an ethnic one. A person of Indian origin born in America or the UK is still very easily identifiable and is identified by their Indian identity.

The usage of the word "racism" to include xenophobia is common enough in a casual context that I cannot believe that you are simply not aware of that usage. By choosing to argue over the semantics of the word racism over usage you probably already are familiar with, you are diverting attention from what really matters here: that said racism or xenophobia exists and negatively affects real human beings.