I'm sending an Xbox 360 to a guy in India. Will he be able to play the games I'm sending along in India? Will Xbox Live work in India with my US-bought Xbox? Can he do XNA development on it?
According to the Create MSDN forum, your friend will be able to develop XNA games, and deploy them locally to the Xbox, but cannot upload them to the XBLIG store nor download other people's games, as there is no XBLIG store in India.
It is possible to set up a US XBL account from elsewhere in the world. I suspect there are many legal issues involved if you try to do that and then accept payments. The XNA XBLIG FAQ contains several questions related to this - I'd suggest consulting a lawyer or reading it and your tax codes very carefully.