If I file as a non resident, can I claim a $3400 deduction for spouse according to Indian treaty? Does she need an ITIN for that also?

Thanks

If you are F-1 or J-1, you CAN claim your spouse as a dependent under the U.S.-Indian Tax Treaty if they have no U.S.-sourced income.

Yes, she will need to submit a signed Form W-7 with the tax return for an ITIN to be claimed as a dependent.