The famous Chinese pilgrim I-tsing, who came to India in the seventh century A.C., writes in his record of travels that the 'northern tribes', that is the people of Central Asia, called India 'Hindu' (Hsin-tu) but, he adds, 'this is not at all a common name and the most suitable name for India is the Noble Land (Aryadesha).' The use of the word 'Hindu' in connection with a particular religion is of very late occurrence.
The old inclusive term for religion in India was Arya dharma. Dharma really means something more than religion. It is from a root word which means to hold together; it is the inmost constitution of a thing, the law of its inner being. It is an ethical concept which includes the moral code, righteousness, and the whole range of man's duties and responsibilities. Arya dharma would include all the faiths (Vedic and non-Vedic) that originated in India; it was used by Buddhists and Jains as well as by those who accepted the Vedas. Buddha always called his way to salvation the 'Aryan Path'.
The expression Vedic dharma was also used in ancient times to signify more particularly and exclusively all those philosophies, moral teachings, ritual and practices, which were supposed to derive from the Vedas. Thus all those who acknowledged the general authority of the Vedas could be said to belong to the Vedic dharma.
Sanatana dharma, meaning the ancient religion, could be applied to any of the ancient Indian faiths (including Buddhism and Jainism), but the expression has been more or less monopolized today by some orthodox sections among the Hindus who claim to follow the ancient faith.
Buddhism and Jainism were certainly not Hinduism or even the Vedic dharma. Yet they arose in India and were integral parts of Indian life, culture and philosophy. A Buddhist or Jain in India is a hundred percent product of Indian thought and culture, yet neither is a Hindu by faith. It is, therefore, entirely misleading to refer to Indian culture as Hindu culture. In later ages this culture was greatly influenced by the impact of Islam, and yet it remained basically and distinctively Indian. Today it is experiencing in a hundred ways the powerful effect of the industrial civilization, which rose in the west, and it is difficult to say with any precision what the outcome will be.
[ Excerpts from “The Discovery of India” first published in 1946 ]