For those who are unfamiliar, the Gurkhas (or Gorkhas) come from a region of Nepal west of Kathmandu, and have been actively recruited by the British for service as mercenaries since 1815. It so happened that the British discovered the Gurkhas' military aptitude after defeating them in a series of particularly tough battles -- just as they did with the Sikhs, the Marathas, and indeed, the Zulus (all of whom would be designated "martial races"; see the full list here). Often, troops from one recently conquered region would be instrumental in defeating the next group (the Gurkhas were deployed in the Anglo-Sikh Wars, for instance).
As a side-note, though most Gurkha regiments joined the Indian army at independence, the British did retain a small number of Gurkhas for the British Army after 1947 -- and they still actively recruit them today (on a fully voluntary basis, of course). Gurkhas were deployed in the Falklands' War, in Kosovo, and are now in Afghanistan. Retired Gurkhas are also probably going to be deployed to monitor the fragile peace agreement between the Maoists and the new government of Nepal. Joining the Gurkha regiments in the British Army is considered desirable, but it's a tough gig to get: one of the physical tests in order to be accepted involves running uphill for 40 minutes with a 70 pound bag of stones strapped to your back!
The author of the book on the Gurkhas is mainly a military historian, not an anthropologist, so it's probably too much to expect to ask him to deconstruct the idea of "martial races." But it's extremely frustrating that in episode after episode Farwell seems to reiterate a few straightforward stereotypes as explaining the Gurkhas' effectiveness in battle on behalf of the British: they are simple peasants, they are hardened by life in a mountainous region, and they have a strong sense of cultural identity. The same could be said of many other ethnic groups, most of whom were not designated "martial races." So why the Gurkhas?
It seems hard to escape the conclusion that "martial race" is a convenient term created by the British to continue military recruiting patterns favorable to the progress of imperial expansionism.
The authors of the Wikipedia entry on "martial races" have stated the problems with the term quite well:
Martial Race was a designation created by officials of British India. The British officials described these races as naturally warlike and aggressive in battle, and to possess qualities like courage, loyalty, self sufficiency, physical strength, resilience, orderliness, hard working, fighting tenacity and Military tactics. The British recruited heavily from these Martial Races for service in the colonial army. This doctrine of martial races postulated that the ability and desire of the soldier was inherited and that most Indians, with the exception of the specified castes, did not have the requisite genes that would make them warriors. Critics of this theory state that the Indian rebellion of 1857 may have played a role in reinforcing the British belief in Martial races. During this event some Indian troops (known as "Sepoys"), particularly in Bengal, mutinied, but the "loyal" Sikhs, Punjabis, Dogras, Gurkas, Garhwalis and Pakhtuns (Pathans) did not join the mutiny and fought on the side of the British Army. From then on, this theory was used to the hilt to accelerate recruitment from among these races, whilst discouraging enlistment of "disloyal" Bengalis and high-caste Hindus who had sided with the rebel army during the war.
The geography and culture of these martial races had common marks, such as hilly and mountainous terrain, a basis as hunting or agricultural societies, and a history of conflict, whether internally or with external groups. A case in point are the Gurkhas, who challenged British imperial expansion and gained the respect of their enemies for their fighting prowess and tenacity, thus earning them their reputation and their continued employment in the British Army. Some authors like Heather Streets rebuff this Martial Races Ideology stating that the military authorities puffed up the images of the martial soldiers by writing regimental histories, and by extolling the kilted Scots, kukri-wielding Gurkhas and turbaned Sikhs in numerous paintings. The Martial Race theory has also been described as a clever British effort to divide and rule the people of India for their own political ends." (link)
The damning parallel between the groups that were loyal during the Mutiny and those who would be designated as "Martial Races" later seems hard to escape. Though I generally try and avoid paranoid speculation, the idea of "divide and rule" also seems to be relevant here: by keeping the various ethnic regiments of the Indian army divided along linguistic or ethnic lines, they prevented them from congealing along racial (as in, brown vs. white) ones.
For better or worse, groups once designated by the British as "martial races" still tend to carry that badge with pride. But it's a dubious source of honor, and also an extremely dubious way of asserting one's manhood & masculinity. (How much violence against women has been perpetrated in the service of the myth of Jat or Pathan/Pashtun martial masculinity?) I think it would be better if we just threw out all those old myths, spattered as they are with the blood of wars of subjugation.