Any text of a book or scripture should be understood with its context. A text devoid of context can be easily misunderstood and misinterpreted. No book or scripture is an exception to this.
Is "Kafir" a derogatory word? No. “Kafir” is an antonym for the word “Muslim”. Opposite words or antonyms are used in every faith. Hinduism uses the word “Melechas” to refer to people who are foreigners or have a non-vedic origin.
If Hinduism does NOT become “Indian” just because it originated in India, why should Islam alone become “Arabian”? There are around 180 crore Muslims in the world. 80% of those Muslims are non-Arabs. If Islam is an Arab religion, why will 144 crore non-Arabs follow it?
God does not prevent Muslims from being just and extending highest form of righteous treatment to non-Muslims. Prophet Muhammad commanded Muslims to treat their neighbors kindly and politely. This includes neighbors of all faiths.