Lots of countries around the world have an ID card which is the default ID mechanism and is often mandatory to have (compared to say a driver's license, which many simply don't have because they never drive). The US doesn't widely have that, altough there are some slow efforts to that effect AFAIK.
You'd be surprised how well a US Passport Card is accepted as an ID around India. Most people are just looking for something official in a card-sized format. There's no address, no real passport number on it. It's a more harmless document to identify yourself abroad.