How do US grad schools interpret international GPAs?
1) How do grad schools in the US interpret international GPAs?


Exactly the same way we interpret domestic GPAs!  We rely on our previous experience with applicants from your institution and our (Google-enhanced) knowledge of the content and rigor of your degree program.  After all, there's no universal interpretation of grades even within a particular country.

And as others have already said, your GPA is only one component of your application, and not necessarily even the most important.


  2) Would it be okay to address the reasons for my low GPA in SOP)personal statement briefly, like in a line or two? If so, how should I subtly go about doing it? I don't want to make an excuse and of course, don't want to blame others.


You're assuming your GPA is low enough to require explaining, but that assumption is based on a naive numerical conversion, which really isn't appropriate.  Whether your grades are actually "low" is a good question for the people who will write you letters, who presumably have some experience with the type of PhD programs you're applying to.  (Otherwise, how would they know what they're recommending you for?)  In particular: Would your GPA prevent you from getting a PhD at your current institution?

However, I do think you need to explain your lack of formal research experience ("My university didn't offer courses and a supervisor directly in my area of interest"), both as justification for your current research record and as motivation for pursuing a PhD elsewhere.


  3) Should I just give up on applying for PhDs then and focus more on the masters program, say in some Canadian universities?


No!  Never throw away opportunities until you're sure you don't have them!  If you know you want a PhD, and you believe you are qualified for a PhD, and enough people are willing to write you strong recommendation letters for PhD programs, then you should apply to PhD programs!  But if you're still worried about your chances of admission, you should also apply to some masters programs as backup.