i think it has to do with how racially mixed a particular area is. around here we have a large indian population, indian food everywhere, indian markets...most people around here can tell when someone is from india. lots of patels and chaudharys. to me there are very distinct differences between arabs and indians, from the way they talk to the way they look. sometimes its hard to tell but for the most part i can't see how anyone would get the two confused unless they've never met a member of either group. it's weird to americans but they are sometimes snobby to each other if someone is from the "wrong part" of india.
speaking of uncalled for racism against people from that general region, i remember a couple days after 9/11 me and some friends were in a dollar store that was run by pakistanis, and they clearly felt like they were in enough danger to put up a huge sign on the front window that said "we are not taliban". i'll never forget it. people were being FUCKED UP to anyone with a turban. i can actually remember a couple of times in the following weeks/months where people would see someone "iffy" and start talking low, and someone would say something like, "no i think he's indian". people have a need to feel like they made someone "pay". it's fucked up.