This thesis stems from the observation that there exists a problem of recognizing Indian thought as philosophy, and, by extension, including it in the field of academic philosophy in the West. The question I examine is regarding the role of hermeneutics in shaping the West’s image of Indian philosophy. As my point of departure, I use Friedrich Schlegel’s text On the Language and Philosophy of the Indians as a case because it exemplifies an influential early Orientalist encounter with India. I examine the interpretive methodology in this text both in light of its historical-philosophical context and in light of the postcolonial debate, and identify limitations of the hermeneutical approach, both in terms of a misconstruction of Indian thought, and of maintaining an Orientalist misrepresentation. In the final chapter, I discuss these findings in relation to the debate on the exclusion of non-Western philosophy in academic philosophy in the West.