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As an Indian, this is a topic of conversation even inside India. For example, the place I worked for in Bangalore had people who spoke to each other in Hindi, another bunch that spoke Tamil, Telugu, etc. When there was a common need, of course they spoke in English or Hindi (when everyone understands it). But to each other, people speak in their vernacular.

For someone to whom English is a second language, it doesn't come naturally to converse all the time in English - they probably think in their vernacular and translate it into English all the time they talk to you. Asking them to converse among themselves in English just so the lone English could understand their Shah Rukh Khan gossip is unrealistic.

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