We are also Indian-American and my 4.5yo DD has developed a princess obsession over the last couple months. She goes to a home daycare with 3 other girls -- 2 are indian, and one is African-American. Babysitter is also indian (family friend). DD is a diva -- loves clothes and shoes, won't wear things she's not in the mood for, etc. She loves to dress up. She's got both indian dress up clothing (scarves, lenghas, saris, bangles, bindis, etc) as well as western clothing like tutus, purses, princess dresses (Halloween costumes), etc. We encourage her to dress up as both a "Disney Princess" and as an "Indian Princess". I watch Bollywood movies, so both kids will sit and watch for me for a bit, and DD loves Bollywood songs, so I encourage her to listen and dance, and to dress up like the actresses she sees. We figure that way she gets the best of both worlds.