ahl-e-kitab means those people [jew, christian , zoroastrian, magians, sabine, etc] who follow the book [taurat/torah , injeel/bible and zend avesta ]. Some scholars include sikh, hindu etc too. Islamic scholars differ on whether Hindus are People of the Book. http://en.wikipedia.org/wiki/People_of_the_Book
What do muslims do when they have to work with majority non-muslims in their rule?
Read the basis of their dealings here:
Make up ur mind!