I was in US for less than 183 days in 2011 on H1-B visa. Will I get income tax exemption? Do I need to file as Non-resident alien?

Porbably NOT, because most persons working on a H-1B visa are being paid by a U.S. company permanently established to do beuiness in the United States.

That being the case, the 183-day rule does NOT apply, and any income earned IS subject to U.S. income taxes.

I worked for an Indian ITES company. The US company was its client. The employer on my W2 is the Indian firm.

The fact that you GOT a W-2 clearly shows the income was paid from a firm with a permanent base in the United States.

That makes the income U.S.-sourced and subject to U.S. income taxes.