Racism is mostly due to lookism, unironically. Notice the unbridled genocidal hate Indians get online even though they speak English, don't form ghettoes, are low crime etc. There are also material complaints about Indians (nepotism and cause of the housing crisis), but those are secondary.
As for racism between aesthetically identical peoples (like in the Bosnian War), that is more complex. It's more existential ("they will kill us if we don't kill them"), caused by failed diplomacy and unchecked inflammatory rhetoric by pundits.