"red resinous substance," 1550s, perhaps immediately from French lacce, displacing or absorbing earlier lacca (early 15c.), from Medieval Latin lacca. All these are from Persian lak, from Hindi lakh (Prakrit lakkha), from Sanskrit laksha "red dye," which is of uncertain origin.
According to Klein, it means literally "one hundred thousand" and is a reference to the insects that gather in great numbers on the trees and create the resin. But others say lakh is perhaps an alteration of Sanskrit rakh, from an IE root word for "color, dye" [Watkins]. Still another guess is that Sanskrit laksha is related to English lax, lox "salmon," and the substance perhaps was so called from being somewhat the color of salmon [Barnhart]. Also see shellac (n.).