JAA licences held in higher regard
I'm afraid it's true. FAA licenses aren't really looked at with much degree of importance unless it's an ATP. The fact of the matter is, the training in the US at the low hours level is inadequate as considered by most operators outside the US. I obtained my PPL in the states and when I came to the UK to start my ATPL course, they didn't even consider my US license and said it's better we start from the beginning. When I went for a SIA interview, one of the captains interviewing me actually mentioned the US pilots being a bunch of cowboys. NOt my opinion neccesarily, even though I think the JAA standard is far higher than the FAA, but it's generally what most airlines think outside the United States. My advice is to go for a non-FAA license if you are a low hour pilot. It opens up more options.
Oh and in the case of the DGCA requiring mandatory test for licence conversion, well i'm afraid that's a bunch of BULL. It depends of which contracting ICAO state your licence was issued. If it is from the CAA then it's likely you will not have to do a flight test.