India's image as a safe destination has taken a beating recently post 26/11 Mumbai attacks. We saw the IPL shifted out of India, Australian Davis Cup team cancelling visits to India, travel advisories being issued by countries against India. I am sure common people from other countries cancelled/temporarily suspended trips or businesses with India too.
Terror, insurgency, political violence and militancy has been a part of India's history. Be it the Naga insurgency (oldest in the country), Kashmiri separatism, Naxal movement, Islamic terrorism - India has been bled continuously all these decades since independence. Apart from the economic, social and political costs it severely dents India's image as:
A country at peace with itself
A secure place to live and conduct business in
A country that has successfully managed to preserve its territorial integrity and will succeed in the future by successfully accomodating diversity and regional demands
A stable democratic polity that 'listens' and is capable of ensuring liberty and prosperity for all
While these movements may or may not be results of genuine grievances, what goes without saying is that it affects India's standing in the world. We get to read in the news regularly about countries raising issues about India's human rights record in Kashmir, don't we? How can a country claim a larger role in international relations if it's own house is not in order? This is a message that might go out through the news media . Take for example the recent Maoist attacks in Lalgarh. It got space in media outlets all over the world, almost conjuring up an image of India as a 'disturbed' state:
Read the coverage in the following:
BBC World, Al Jazeera, Daily Times of Pakistan, Xinhua, Global Times -Chinese propaganda machine
Public Diplomacy initiatives should definitely need to measure the impact of such messages and also have active plans/crisis communications network in place to neutralise the impact of such messages. A strategic approach should also look at how India can get mileage of out such messages and explore possibilities to leverage it for geo-political advantage. The US, for example, successfully used 9/11 imagery and coverage to it's advantage and continues to do still.
It's interesting that there is a wikipedia page on Lalgarh conflict. Hope South Block Mandarins monitor information in the social media sphere regarding domestic developments as well.