1. A highly
offensive, racist term used in the UK, (usually) to refer to South Asians. The kind of people who use this term are usually not bothered about specific ethnic origins, so the term is also widely applied to Middle Easterners, North Africans and sometimes even swarthy Europeans.
2. A highly
offensive term used by Indians to refer to
Pakistanis.
3. A term that has been to some extent "reclaimed" by people of Pakistani descent, and used to refer to each other, much in the same way that some African-Americans use the word nigga.