So yeah this is the same thing that one my "Indian friends" brought up. He was very upset at the way India was portrayed in this movie. He said these kind of movies should be banned and what not. Then there were other "Indian friends" who said what they showed was what is the reality in India. They did not seem to find it offensive.
As for my opinion, it is a movie, I watched it, found it quite entertaining. It's plain old love story, but created in an interesting way. Yes, they showed India in a poor light, and must admit there might have been a time or two when I might have enjoyed this very thing. It's just a commercial movie and I don't think the director, writer, producer or anyone else for that matter owe it to anyone to project India in a good way. They are just making a movie, just trying to make money.
And yeah, someone already mentioned in this thread, if you watch Hindi movies, there are quite a few where all they think Nepal is, is a land of Gurkhas/Bahadurs and that too in a demeaning way. So when I mentioned this (one of my other "Indian friends" mentioned a movie Gharwali Baharwali and the ridiculous potrayal of some assumed culture in Nepal), he said such movies should be banned. Well, that movie did end up getting banned in Nepal.
He feels the same way about Slumdog now, as we possibly did when we watched that sort of Hindi movie; so I guess it's all okay. That's how it works, a bigger nation (culture) just enjoys bullying those smaller time and again. Just take it with a pinch of salt.