It is the second time former MP John Taylor has used the label
The Taoiseach Leo Varadkar has said he thought it was a parody Twitter account that called him a 'typical Indian'.
Former Ulster Unionist MP John Taylor, also known as Lord Kilcooney, has denied he was being racist when he made the remarks - refusing to delete the tweet.
Mr Taylor made the comment in a tweet responding to a new story about Mr Varadkar’s recent visit to the North.
The story, posted by the BBC, carried claims from unionist representatives that Mr Varadkar had displayed "poor manners" by visiting Northern Ireland without following "normal protocols."
Typical Indian— Lord John Kilclooney (@KilclooneyJohn) April 30, 2018
But Mr Varadkar did not seem to take the tweet too seriously, telling the Dáil: "In terms of Lord Kilcooney's tweet I did see it.
"I actually had thought that was a parody account, but seemingly it's not - it actually is for real.
"But that's all I'll say about that".
The Taoiseach visited counties Armagh and Down on Monday, along with the EU’s chief Brexit negotiator Michel Barnier.
The trip prompted DUP MP Jeffrey Donaldson to accuse Mr Varadkar of showing "poor manners and disrespect" claiming no local representative was informed of the visit and "none of the other normal protocol" was followed.
At Warrenpoint port, the second biggest port in Northern Ireland. Companies using the port are very concerned about the potential impacts of #Brexit & want to ensure there are no new barriers to trade here. pic.twitter.com/WrI0yUjCdR— Leo Varadkar (@campaignforleo) April 30, 2018
The Taoiseach has also insisted he informed the Northern Ireland Office about the trip, adding: "I can assure anyone that I am not an invader, I just want to be a good neighbour.”
He said he received a "warm welcome" in the North.
Mr Taylor – known as Lord Kilcooney – has refused to delete the tweet and has denied it was racist.
"I am certainly no racist and in particular have an admiration for Indians," he wrote on Twitter.
"A member of the British/Indian APPG (All Party Parliamentary Group), only yesterday I had a reply from 10 Downing Street asking for a relaxation of visas for Indians.
"My point was that the PM had upset Unionists more than Irish PMs had!"
I am certainly no racist and in particular have an admiration for Indians.a member of the British/Indian APPG only yesterday I had a reply from 10 Downing St asking for a relaxation of visas for Indians. My point was that the PM had upset Unionists more than Irish PMs had!— Lord John Kilclooney (@KilclooneyJohn) April 30, 2018
UUP leader Robin Swann responded by saying the crossbench life peer "doesn't speak for me" while DUP MLA Christopher Stalford called it "absolutely ridiculous behaviour."
It is the second time Mr Taylor has caused anger by referring to Mr Varadkar, whose father is from India, as "the Indian."
Last November he accused the Tánaiste Simon Coveney of "stirring things up" in relation to Brexit, adding that he was "clearly hoping to undermine the Indian."
At the time he insisted he was not racist – claiming that he used the term because he didn’t know how to spell ‘Varadkar.’
The UK House of Lords standards commissioner dismissed a complaint against him as it did not fall within the scope of its code of conduct.