You are running into a two issues, the first being that you are dealing with people who not too long ago's jobs where in jeopardy due to the outsourcing craze. It seemed like ever business man in America could not figure out how to get on this outsourcing craze and fire all of their development staff. A lot of us saw it happen to our good friends, and some of us where too close to the hot seat for comfort. It's unfortunate and it's unfair to you personally, but people like to attach a face to their outrage given that it was Indians taking their jobs naturally they became the face of their frustration. Not everyone thinks like this, and I don't believe that their is racist intent, eastern Europeans experienced this as well, they where late to the cheap outsourcing game so it was less sever, I imaging that if they had been as early to the game as India, they would see the same amount of discontent taken out on them.
The second and I believe more sever issue, is cultural differences in the way India and America do business. It is no great secret that as a culture you guys do not like to deliver bad news. I think it is because as a culture you are as well far more respectful than Americans on average. Coming from the American south, I see this all the time. As a culture we in the south had a concept called southern gentry (this culture has died out) part of there culture is that your are considered of a less social status if you are not hospitable and respectful, there are a group of people that see this as a weakness due to a mis-match of cultures. I was part of the first generation in the south that was more culturally compatible with the rest of America so I see the contrast between the two very well.
Anyway I am derailing with back story to get to my point, the point is this aversion to bad news when applied at the management and project management level can be disastrous to a project. Not getting a complete picture of the bad issues can leave people in the dark and hamper their decision making process. 9 times out of 10, when I hear an India outsourcing horror story it has everything to do with the management of the project and nothing to do with the quality of the developers.
You guys experienced a gold rush, when we decided to outsource development to you, some of your business infrastructure and practices where not ready to do so, it is a natural product of two cultures colliding. I would not take it personal, and would recommend trying to look at the human issues involved, something American developers would be well served to do as well.