This is right now a grey area.
Here is an excerpt from what the State department thinks:
Presently, the Government of India offers a special visa for “Persons of Indian Origin” (PIO). It is contemplated that OCI status will be similar to PIO status. At present, the PIO card allows a person to enter and exit the country without a visa for almost any purpose for any period of time, without the requirement of registering with immigration authorities. However, PIOs cannot vote in Indian elections, and are also subject to other restrictions, such as the ability to own certain types of real property in India. The Embassy understands that similar restrictions may apply to OCIs. The Indian government has indicated that a person who applies for OCI status will not be required to take an oath of allegiance to India. Accordingly, at this time, it is not clear whether an OCI would legally be considered a “national” of India.
Any person who is considered to have dual nationality as a citizen of both India and the U.S is subject to all Indian laws. Moreover, a dual national also may be subject to other laws and regulations that impose special obligations on Indian citizens, such as taxation. In some instances such as arrest, dual nationality may hamper U.S. Government efforts to provide assistance abroad. Additional general information about dual nationality is available at
http://travel.state.gov/travel/cis_pa_tw/cis/cis_1753.html.
