The gist of Mr Pai's article is that "South Asia" is not only geographically misleading but more importantly that it creates a false identity, namely that it tricks us into thinking there are people called "South Asians" when there are really only Bangladeshis, Indians, Pakistanis, etc. I take exception to both lines of reasoning.
The first point is just irrelevant. Who cares that Greenland isn't really green or that the Far East is neither far nor east if you're in New Zealand? In any case, it's a strained interpretation because concluding that South Asia isn't in the southern part of Asia requires you to treat the south-eastern islands (Malaysia, etc.) as a counterbalance to the vast majority of the continent's landmass, which is north of the Indian subcontinent. Let's not forget that Russia is actually the largest country in Asia followed by China and then India.
It's the second proposition, that South Asian is not a legitimate identity, that is worrisome and strikes me as having a dark, jingoistic implication wrapped in the rhetoric of mutual respect. Mr Pai argues that,
There's no such thing as a South Asian cultural, civilisational or political identity. Nor is Indian culture and civilisation the exclusive property of the citizens of the Republic of India.This seems to be a contradiction but actually it's just counterintuitive: Mr Pai is not claiming that South Asia is not a "cultural, civilisational or political" unit (there is simply no denying that it is) but rather that all of that should be called "Indian." The obvious problem, which he dismisses out of hand, is that there is a pre-1947 India and a modern nation-state called India, and relating one to the other is a complicated exercise.
It's like worrying about whether Shakespeare was an American writer or not. In Shakespeare's day, there was no United States so even though he spent his entire life in England (remember that there was no United Kingdom either until 1800), he can be in a cultural sense considered an American writer—or an Indian writer for that matter since I find that Indians educated in English-medium schools often know Shakespeare better than Westerners. But Americans and Indians have to share him with the rest of the English-speaking world instead of implying that he belongs to Americans or Indians alone. The same dynamic is at work here.
Claiming that when in 2010 we say "Indian" without any context it can mean the pre-Partition cultural region of India is sophistry or worse it's an attempt to disenfrancise South Asians who are not Indian citizens while claiming to include them. By the reasoning that "South Asian = Indian", Pakistan and Bangladesh are also India. The solid lines on every map of the Subcontinent tell us otherwise. Similarly, you obviously can't call Canadians "Americans." Yes, Canada is in North America but the term "American" refers specifically to the United States of America. (Interestingly, in Spanish "americano" does usually mean "someone from the Americas" rather than "someone from the United States.") "Indian" by necessity now refers primarily to the nation-state of India rather than to the shared culture and history of the Subcontinent.
We have to reject Mr Pai's formula that "South Asian = Indian" for practical reasons, but there is a further moral reason to do so. A subtext comes to the fore when he writes,
If, as [Pakistan's founding president Muhammad Ali] Jinnah had presumed, the country he carved Pakistan out of had named itself the Republic of Hindustan, no one would have even bothered to invent 'South Asia'. All those who call themselves South Asians now would have been content calling themselves Indian. The decision to call India India not only enraged the Quaid-e-Azam of Pakistan [i.e. Jinnah] but sowed the seeds of an identity crisis among succeeding generations of Pakistanis, Bangladeshis, progressives, Left-liberals and impressionable members of Western campuses.
I'm not sure whether it's historically correct that Jinnah was upset with the name "India" but Mr Pai certainly sets up Pakistan as the villain here. The subtext—and this is certainly one I have encountered many times before—is that we Indians with our democracy and our vibrant economy don't want to be grouped with the Pakistanis who are sinking, which unfortunately has now become more than just a metaphor.
This is how I read Mr Pai's concern with the use of the word "Paki" by racists in the UK to describe all South Asians. It seems to me that racist skinheads are not the sort of people whose usage you cite to make a point about the language of identity politics. Still it would hardly have made a difference if the self-described "Paki bashers" had had the decency to be more specific about the country of origin of the immigrant community they were terrorising. Of course Pakistan and India have taken vastly different political trajectories since 1947 but that cannot change the fact that the two spring from a common history and culture. The skinheads hated South Asians because of their brown skin and not because they supposedly came from Pakistan (rather than India or Sri Lanka).
Nor does using a term like "South Asia" necessarily imply that there are plans afoot to impose some kind of political union along the lines of the European model. Regional cooperation on the other hand is a good idea and besides the fact that the South Asian countries are contiguous to one another, the shared culture and history is a crucial bond. But what could Indians possibly gain in negotiations with Pakistan by opening the meeting with an ultimatum that Pakistani culture must be referred to as "Indian culture in Pakistan"? By all means call it something that recognizes its commonality but call it by a neutral term. The correct choice is obviously "South Asian."
Mr Pai mocks the concern of people like me over "South Asian" identity as wooly, lefty foolishness but consider what's at stake. Acknowledging that one is South Asian doesn't require that one identify primarily as South Asian because, of course, everyone has multiple identities. It's well-established in the social sciences that these identities are hierarchical and can be brought to the surface or supressed. Sometimes your loyalty to the nation-state is paramount and you're an Indian, but other times it's not, so you can be a citizen of the world or more precisely part of the culture of the Indian Subcontinent (i.e. what everyone besides Mr Pai is content to call "South Asian") without being any less Indian.
Where Mr Pai's argument falls flattest is his treatment of the diaspora's identity issues. I raise this point because his article implies that he started thinking about the issue of nomenclature after he had heard that "South Asian" culture was making inroads in the West. My experience has overwhelmingly been that Americans and Canadians of South Asian descent feel a sense of cultural unity with regards to one another despite belonging to different sides of the Indo-Pak border. Their cultural identity is more relevant for many of them than their parents' nationality. That should be a cause for inspiration rather than derision.
Bonus: The term "India" is itself very old and its meaning has itself shifted over the centuries. Originally referring to the Indus river, ancient Greek texts were vague about where it was but they most likely imagined much of it to be what is now Afghanistan. In Sanskrit texts India (as Jambūdvīpa or Bharātavarṣa) included Southeast Asia (or indeed any place where you could find the sacred mountain, Mount Meru), and in Persian and Arabic texts it generally included East Africa and southern Arabian Peninsula. During the colonial period, it included Burma and Afghanistan because they were administered from Calcutta.