Abhi Sri, I dont agree with what you said at the end, that IITs are better than MIT,CMU and Ivy league schools alone (I assume you mean MS/PhD and not undergrad). I can list a load of state funded schools in the US which are better than IISc and IIT... here's a short list: UC Berkeley, UCLA, Univ of Texas, Austin, Georgia Tech, Univ of Illinois, Urbana Champaign, U of Michican Ann-arbor etc. Some schools that are private and not Ivy league: Stanford, CalTech, USC (good for PhD).
I would say, IISc is the best India has, and is comparable to a good school in the US. IITs, nowhere in the same league as the list you and I mentioned for MS/PhD. The main thing for research is $$$$, to attract students and faculty, as well as set up facilities, and that is lacking. It is also true that it is easier to get into a foreign school than it is to get into IISc. And for that, I blame the system. As always, India judges people on what they know, while the americans judge people on what they are capable of. In other words, Indian sarkari institutions judge people based on the ability to take exams, while the americans consider other stuff as well (a bare minimum GPA, and then other stuff). I think the system needs reform. If you dont believe me, ask anyone in the IIT undergrad about what they think of their own school's MS and PhD program, and about the students in them.
There's this joke I read about a guy being interviewed and he said "I've graduated from the top 25% in all my exams, and I've always done well academically. I dont know if it's the economy or just me, but there doesnt seem to be a market for someone who is an expert at taking exams".
