In 1975, the federal government convened an interagency committee to “(1) coordinate development of common definitions for racial and ethnic groups; (2) instruct the Federal agencies to collect racial and ethnic enrollment and other educational data on a compatible and nonduplicative basis.” Although the report that spurred the existence of the committee had focused on the lack of uniform definitions of Chicanos, Puerto Ricans, and American Indians, the committee decided that it would make recommendations for racial and ethnic categorizations for the entire American population.
The groups and definitions recommended by the committee form the basis for the groups and definitions we still use today, with one major exception. Here is the committee’s recommendation and explanation for the definition of a person in Caucasian/White category:
A person having origins in any of the original peoples of Europe, North Africa, the Middle East, or the Indian subcontinent. The major problem associated with this category, as with the “Asian.. –” category (above) was how to deal with persons from the Indian subcontinent. The question at issue was whether to include them in the minority category “Asian…” because they come from Asia and some are victims of discrimination in this country, or to include them in this category because they are Caucasians, though frequently of darker skin than other Caucasians. The final decision favored the latter. While evidence of discrimination against Asian Indians exists, it appears to be concentrated in specific geographical and occupational areas. Such persons can be identified in these areas through the use of a subcategory for their ethnic subgroup.
A Indian-American newspaper described what happened next:
In January 1976 … board members of the Association of Indians in America (AIA) and their legal counsel met with the Federal Interagency Committee’s representatives in Washington D.C. with the purpose of effecting a change in the Indian classification from the “White” category into the “Asian or Pacific Islander” category. Dr. Manoranjan Dutta, president of the AIA, said that his organization began its campaign for the reclassification in the wake of numerous complaints by Indians of alleged discrimination. According to Dr. Dutta, Indians were not getting equal opportunity in jobs, for example, and any discrimination which they faced was being covered up under the guise of their “White” classification—a sort of “hidden” discrimination. Only if they were classified in the “correct” category of “Asian” could they seek immediate legal redress in cases of discrimination. Furthermore, the Asian category appeared to be more appropriate due to geographical reasons—India is a part of Asia.
In August 1976, a review of the five categories was indeed made, and the Federal Interagency Committee agreed by consensus to move the Indian immigrants from the “White” category to the “Asian and Pacific Islander” category… Dr. Dutta announced later in November of 1976 the finalization of the classification change to the Indian media, but it tended to be largely ignored by the American press.
Interestingly, “another group of Indians, who disagreed with this change, and who preferred that Indians be classified as ‘White’ in this context, later approached Hall’s office to lobby for a return to the ‘status quo,’ but the effort was in vain, as the group had no data to back up their cause.”
The final rule, promulgated by the Office of Management and Budget, did place Indians in the “Asian” category, where they have remained ever since.
The reason that they were put in the white category to begin with has been lost to history, beyond what the report quoted above said. I suspect that part of the issue was that the category used previously for “Asian” was “Oriental,” by which people typically meant those from East Asia. Given that the largest relevant groups in the U.S. by far were Chinese, Japanese, and Filipinos, with very few Indians in the U.S. at the time, the committee was likely still used to separating East Asian “Orientals” from others.
In any event, that’s how Asian Indians, who had been deemed non-white by the Supreme Court in the days of the Asian Exclusion Act in the 1920s, almost became white in the 1970s.
For what it’s worth, it’s long been known that the initial committee report placed Indians in the white category and it was then changed to Asian, but I believe I’m the first one to dig up an account of what happened in the interim.