As a foreigner with no loocal knowledge of the language and no connection with local community , i hav still to come across caste discrimation directly but this article from the BBC certainly asserts that it exists .
"...Many higher castes Hindus in parts of India's Tamil Nadu state still not share with the Dalits, formerly known as untouchables? They insist on separate glasses for drinking tea and they do not allow the untouchables to go to the same barber shops. They ban them from temples, cremation grounds and river bathing points, among other examples. Studies have found at least 45 different forms of "untouchability" being practised by upper caste Hindus against the Dalits in Tamil Nadu.
A wall segregating local higher caste Hindus residents from their Dalit counterparts in Uthapuram village in Madurai district barely 600km (350 miles) from the state capital Madras (Chennai) didn't exactly come as a surprise. The wall kept Dalit people out of the main parts of the village. The authorities demolished part of the wall following an order from the state government to allow Dalits to go where they wanted in the village. About 800 higher caste Hindus decided to leave the village and seek refuge on a nearby hillock in protest against the decision.
Dalits or the Scheduled Castes, the official name for the lowest castes, constitute roughly 19% of the Tamil Nadu's 62.4 million people. More than 60% of Christians in Tamil Nadu are Dalits - most converted hoping to find more freedom. But they still have very little voice and are largely shunned in the church. They again find themselves humiliated, with separate pews, services, churches, corteges, enclosures in cemeteries and so on. A tentative effort was made in a village called Erayur to integrate the Dalits in all the services. But a group of Christians protested and threatened to go back to Hinduism if the Catholic church went ahead with its initiatives.
The diocese had to back down.
Until class politics grow to dominate and caste allegiences are rejected , the capitalist class will continue to control through divide and rule . Capitalist driven urbanisation and industrialisation have helped to break down caste barriers to some extent as people moved out of traditional occupations .In the meatime , for the pro-capitalist political parties , caste is about calculated bargaining for greater electoral spoils .