The term Hinduism is not of Indian origin and is not used in any of the sacred texts originating in India. Hindu is what the Persians called the people living on the other side of the Sindu river. The original term for the belief system of the inhabitants of the Indian sub-continent is Sanatana Dharma which can translate to Eternal Truth. The Indians did not need a term to differentiate those who followed santana dharma because if you lived you were part of creation and therefore part of the eternal truth. Sri Aurobindo put it nicely:
‘This is the one religion that can triumph over materialism by including and anticipating the discoveries of science and the speculations of philosophy. It is the one religion which impresses on mankind the closeness of God to us and embraces in its compass all the possible means by which man can approach God. It is the one religion which insists every moment upon the truth which all religions acknowledge that He is in all men and things and that in Him we move and have our beings. It is the one religion which enables us not only to understand and believe this truth but to realize it with every part of our being. It is the one religion which shows the world what the world is, that is the sport of God. It is the one religion which shows us how we can best play our part in that sport, its subtlest laws and its noblest rules. It is the one religion which does not separate life in any smallest detail from religion , which knows what immortality is and has utterly removed from us the reality of death.’’
Dr. R.K. Lahiri has a nice essay addressing this topic.
I find it interesting that the terms, Hinduism and Hindu have been adopted by the rest of the world while Indians themselves generally do not use. Or they use it because of the dominance of the english language. I have always been intrigued by languages that use different labels for lands and people than that population does. Hari OM.