From what I understand and remember of the Indian citizenship laws, a child born in US will be considered an Indian citizen by descent if both parents are Indian citizens and his/her birth is registered with Indian consulate within 1 year (or after 1 year with permission from central govt, meaning anytime)

Now, by virtue of being born in US, the child is considered US citizen by US govt, unless the person renounces it (and the person cannot do it until they are atleast 18).

Now, as per Indian laws, you loose your Indian citizenship if you voluntarily acquire foreign citizenship. But a child born in US (disregard diplomatic parents, etc) has acquired US citizenship involuntarily.

In essence, a child under 18 is both Indian and US citizen. The person is required to renounce his/her US citizenship at 18, if he/she wants to keep Indian citizenship. This is clearly laid down by law. See http://www.mha.nic.in/citizenship/citi_act1955.htm If you scroll down a bit, you will see "A minor who is a citizen of India by virtue of this section and is also a citizen of any other country shall cease to be a citizen of India if he does not renounce the citizenship or nationality of another country within six months of attaining full age."

Now, as far as Indian passport goes, Indian govt will not issue unless you testify under oath that you do not hold any other passport. What people forget to appreciate is, PASSPORT DOES NOT EQUAL CITIZENSHIP. Just because you cannot hold Indian passport, DOES NOT MEAN that you cease to be an Indian citizen. (I am sorry if I missed that in the 6 pages somewhere).

So in my book, this issue is ripe for a court challenge in India when dual child citizens (where foreign citizenship is acquired involuntarily) are denied Indian passport while holding another country's passport. The issue is clear after 18. It is the first 18 years that needs to be challenged in court. Practically, unless someone is willing to bell the cat, Indian govt will keep denying legitimate Indian citizens from excercing their constitutional right to travel freely from/to India by not letting them have Indian passport if they hold foreign passport as the same time. I believe this is unlawful rulemaking on the actual law and should be struck down by Indian Supreme Court.

That is my take on this.