Earlier quoted context omitted.
> Indian (dots) stores Huh?
Clarification: Americans confuse Indians between those from Bharat/India and Native Americans. Dots and feathers is a common way to differentiate between both. I am from India.
If it's ambiguous, I say "Indian (from India)" or "Indian (subcontinent)" vs. "Indian (Native American)". Or I'll just say "from India" or "Native American", and avoid that ambiguity.
That said, even "Native American" is controversial. See https://en.wikipedia.org/wiki/Native_American_name_controver... for full details.
Plus, I think many in the US don't know about the bindi, so referring to "dot" in that context may not help as much as you, someone from India, may think.
As to why it feels pejorative, here's are pictures of Native American vendors in Santa Fe. https://www.nps.gov/nr/travel/el_camino_real_de_tierra_adent... . One is recent, another from almost 100 years ago. Here's are some more: http://www.yelp.com/biz_photos/native-american-vendors-progr... http://adorepics.com/santa-fe-indian-market/ .
Do you see feathers?
Other than decades-old stereotypes from mass media, why do you think "feather" is the appropriate term?