The impact that IITs have had on the world is well known - right from New York to Los Angeles; From Bismark (North Dakota) to Orlando. But it is their impact on India that is marginal to say the least. It is my conviction that they are utterly irrelevant to India.
Yes, you might get the odd IAS officer, the odd professor, the odd engineer who works for the government, but that is about it. Four years of rigorous mechanical engineering - and the best job that you can hope to end up with is a line-in-charge at either HLL or ITC. Though I have nothing against such a job, there is absolutely nothing "techy" about it. And hence the exodus from India to the US of A. (Why not Europe? The U.S. has been the traditional destination, and welcomes skilled labour of any sort).
In one's final year at IIT, one has to make a choice. Does one want to be true to one's passion; one's subject, or does one want to stay in one's country? If the latter, opportunities abound in Finance and other management related fields. Research has not yet caught on in India.
But we desperately do need more institutions of excellence. In my opinion, the recent conversion of a university in Cochin to an IIT is a step forward, since that shall mean a higher priority to research and an admission to the undergraduate programme via the JEE, which has proven to be an excellent filter of talent (the coaching classes notwithstanding).
India is booming. It is almost certain that the research work in India tomorrow will be way higher than what it is today. Soon will come a day when our indigenous industry will be able to support world class research ... the day when the average PhD from an Indian university will mean a lot more than it does now ..