For me it feels uncomfortable to have Rakshasa and Genies be fantasy-counterpart Middle-Eastern/Indian people, but I also don't know if just taking the monsters out of their cultural context is cultural appropriation. Is it better to just not use the creatures if you don't have a Fantasy-Counterpart in your world of that culture in the first place? Maybe it would be better to just keep them in Al-Qadim and similar areas of certain D&D worlds instead of having them assumed to exist in most D&D worlds (Eberron, for example)? I honestly do not know the answer, and all of these answers seem a bit uncomfortable to me (at least at the moment).
Does anyone have any suggestions or thoughts?
I think there are lots of options that provide different aesthetics and cultural dynamics.
I think most of them are not generally problematic, but also individuals can vary on considering them problematic.
a) You can have D&D genies that were originally Arabic inspired and strip them of most all Arabian elements so they are elemental humanoid spirits who are wish powered. You can recontextualize them with different cultural traits and appearance. Maybe some Irish Leprechaun traits and presentation with an elemental cast recontextualizes them while keeping the core stats and narrative story elements. Maybe do it solely as elemental wish spirits with no real world cultural trapping hook.
b) You can have genies be Arabic and be the only really Arabic element of the setting. Arabic traits could be their indigenous extraplanar culture and so they are recognizable classic Arabic genies in your generally non-Arabic D&D world.
c) You can have Arabic genies be there alongside of a fantasy Arab culture in your D&D setting.
d) You don't have to have genies at all in your D&D.
The first can be seen as suppressing Arab representation in the game or inappropriate misrepresentation of cultures.
The second can be seen as turning the monster into the people, awful slave-owning bargain twisting Efreeti can be seen as the commentary on Arabs.
The third can be trying to force defined analogue kitchen sink aspects to your setting and its human ethnicity, which might be going with a specific concept or an undefined aspect. It can also lead to a superficial theme park/stereotype presentation of exotic Arab stuff depending on how it is done. This can create add on issues that not adding in a full fantasy representation of an ethnicity would have avoided.
The fourth can again be seen as suppressing and erasing Arab representation in the game. Choosing to do so is to consciously take out Arabic elements, and therefore Arab representation, you would otherwise have used.
Again, I feel all four options are generally fine, simply providing different specific flavor choices and aesthetics.
I would avoid racist caricature of Arabs, but otherwise I would feel fine running or playing in a game with any of those four genie options. Others could feel differently. There is no option that provides an out that does not have potential problems so you cannot just go with the one that avoids all possible complications.