Arch Linux

The only thing the ttf-indic-otf package does is install a bunch of fonts under /usr/share/fonts/TTF/. To fix your issue, the real question is why were those fonts selected for use with xscreensaver. That may be a fontconfig issue or an xscreensaver issue. So I suggest you bring that up with those packages' maintainers. Cheers.

I looked into xscreensaver a little deeper, and observed that for "splash.headingFont" xscreensaver by default is searching for following XLFDs:

1. -*-helvetica-bold-r-*-*-*-180-*-*-*-*-iso8859-1
2. -*-bitstream charter-bold-r-*-*-*-160-*-*-*-*-iso8859-1
3. -*-*-bold-r-*-*-*-180-*-*-p-*-iso8859-1

xlsfonts has following reactions to the above:
$ xlsfonts -fn '-*-helvetica-bold-r-*-*-*-180-*-*-*-*-iso8859-1'
xlsfonts: pattern "-*-helvetica-bold-r-*-*-*-180-*-*-*-*-iso8859-1" unmatched
$ xlsfonts -fn '-*-bitstream charter-bold-r-*-*-*-160-*-*-*-*-iso8859-1'
xlsfonts: pattern "-*-bitstream charter-bold-r-*-*-*-160-*-*-*-*-iso8859-1" unmatched
$ xlsfonts -fn '-*-*-bold-r-*-*-*-180-*-*-p-*-iso8859-1'
-misc-akrutitml1-bold-r-normal--25-180-100-100-p-0-iso8859-1
-misc-akrutitml2-bold-r-normal--25-180-100-100-p-0-iso8859-1
-misc-dejavu sans condensed-bold-r-semicondensed--25-180-100-100-p-0-iso8859-1
-misc-dejavu sans-bold-r-normal--25-180-100-100-p-0-iso8859-1
-misc-dejavu serif condensed-bold-r-semicondensed--25-180-100-100-p-0-iso8859-1
-misc-dejavu serif-bold-r-normal--25-180-100-100-p-0-iso8859-1
$

My guess is whatever comes first is being used. I also assume Engilsh alphabets should look like english ones, that is the point of character encoding AFAIK, but I may be wrong!

PFA akruti1b.ttf opened in fontforge.

The akruti TTF files reuse the ASCII space on purpose. Your problem is that xscreensaver selects that font. It should really match for less general things than '-*-*-bold-r-*-*-*-180-*-*-p-*-iso8859-1'. So I see two solutions:
1. Fix xscreensaver by making it look for more fonts (bistream vera, dejavu, sans, etc.). Perhaps there is a configuration switch for this or perhaps the code needs to be patched.
2. (Less satisfying:) Install one of fonts xscreensaver does look for.

How about separating akruti TTF files (and others that reuse ASCII space) into a separate package? These won't be used for rendering Indian text that use encodings correctly, nor to write text when using an input method.

Adding more patterns to xscreensaver would only make the problem less likely. Plus we'd need to repeat this for each software that uses xlib directly to draw text. A general solution to reject such fonts would be much better, if at all possible.

There have always been symbol fonts reusing the ASCII latin range for other purpose (as fonts for other scripts have been doing too). That's why you don't just pick a random font! For a generic latin font, xscreensaver should (as most other programs do) use fontconfig's defaults: sans or serif. With X11 font names it's not as simple but that does not mean it should just give up and use a random font.

The PKGBUILD for ttf-indic-otf is a simple case of installing upstream's tarball contents to the correct directories and if you wish to have changes made on it (such as splitting latin range-reusing fonts to a separate tarball) you should bring that up upstream. But your problem, really, is with xscreensaver.

The xscreensaver developer has been informed of this issue before I created the bug report. I have this patch here, but we have concerns whether wildcards as a part of font names are portable, hence rejected by upstream.