Origin of Indian
In the 18th century the term American Indian came to be used for the aboriginal inhabitants of the United States and Canada; it now includes the aboriginal peoples of South America as well. (When necessary, further distinctions are made with such terms as North American Indian and South American Indian. ) The terms Amerindian and Amerind subsequently developed in the attempt to reduce ambiguity. For some, especially among North American Indians, the preferred designation is Native American. All these terms appear in edited writing. Whether one or several will gain ascendancy over the others remains to be seen.
The only pre-European inhabitants of North America to whom Indian or other terms using the word Indian are not applied are the Eskimos or Inuit. See Eskimo. See also honest Injun, Indian giver.
"inhabit of India or South Asia," c.1300 (noun and adjective); applied to the native inhabitants of the Americas from at least 1553, on the mistaken notion that America was the eastern end of Asia. Red Indian, to distinguish them from inhabitants of India, is first attested 1831 (Carlyle) but was not commonly used in North America. More than 500 modern phrases include Indian, most of them U.S. and most impugning honesty or intelligence, e.g. Indian giver, first attested 1765 in Indian gift:
An Indian gift is a proverbial expression, signifying a present for which an equivalent return is expected. [Thomas Hutchinson, "History of Massachusetts Bay," 1765]
Meaning "one who gives a gift and then asks for it back" first attested 1892.