I have written before about the state of education system in India in response to the postings in EE Times.
Establishing new technical institutes is not the answer in itself. There need to be jobs for these graduates.
A model of providing services to companies in the US, Europe and now China will not work long term and cannot scale beyond a certain point. India needs to grow it's manufacturing capability and the government needs to provide incentives to do that. As a most of these jobs in the "IT," industry have nothing to do with engineering and technology.
The IT industry in India (software services employs a small percentage of the population)and accounts for a small percentage of the GDP.
The IIT brand is being over exploited. the reason why earlier graduates became top researchers for global corporations was (at least before the advent of the coaching industry to get into IITs), was because the top (in most cases) 1200 to 2000 people out of 1 billion people were selected. These people would have succeeded IIT or no IIT.
The faculty at IITs was put together with mostly high caliber graduates/professors who were educated abroad or in India and joined with the intent of helping the country, inspite of very low salaries and lack of R&D funding.
Without the supply of good teachers, and smart students the IIT brand will get diluted. The same applies in the US....graduates from top engineering schools in the US (even the ones with bad grades), on the average, do better than the graduates with high grades from lower level schools.
The solution has to be a combination of availability of jobs, funding, teachers, students and in general a strong economy. India always has had a history of diluting or trying to milk a brand to the extreme till it has no value.
Live and learn, that is the problem facing the US now: engineering enrollment is down, research funding is down, jobs are down because of politically driven myopic policies. Most engineering graduates in the US do not have jobs to go into as the economy has become more of a services economy.
India does have a shortage of good engineering talent, but the solution is not opening more IITs, the solution is to increase funding to existing educational institutions for labs, better classroom and increased enrollment, attracting better faculty in conjunction with creating incentives for industry to provide jobs to thee graduates.