I see your powers of observation are wanting. Dude, its easy sitting in there India and passing judgement and comments about people who you havent even met personally. And equally ignorant. Regionalism is definitely different from actual racism. But Indians ARE racist. One needs to actually see the interactions of Indians with other races, here in US or in other countries, to know what I am talking about. You have to accept this fact.
You have a lot of options in India in choosing what kind of people you want to associate yourself with. You choose a group of friends and stick with them, disregarding what other people say. One doesnt have such luxury here. You HAVE to deal with people that are there. You dont have many options. And this is when the ugliness comes out.
Let alone racism against each other, Indians are also racist about other races. The blacks, the mexican/latinos, south east asians, Europeans (trust me, you can differentiate between Americans and Europeans) and the orientals. Having worked in a gas station, during late hours you will think and look twice before you open the doors for a black or latino person (even if they are well dressed), but wouldnt think twice if it was a white person (read rednecks). So spare me your holier than thou attitude. Ground realities are very much different than what you presume to be or whatever way you want to paint a picture of.
Btw, as far as my experience goes, (and I may be wrong here) the only groups of Indian who tend to not discriminate other Indians are the Gujjus, the Sardars, the Mallus and the Bongs. The most racist people tend to be those from Delhi.