By whom?
Most Western engineers I have worked with don't think much of their Indian counterparts. While no single assessment will ever properly fit everyone in such a large group of people, the quip goes "the Chinese will do exactly what you tell them to do, but nothing else; the Indians will do exactly nothing you tell them to do but a whole lot besides." This seems about right to me, so I don't think anyone is being over- (or under-) rated. If you hand a project to India you will get something that mostly works, is three times as complex as it needs to be, took five times too long to produce, and is completely unmaintainable. Despite some very impressive individual results, the education system in India is atrocious, on the job education nonexistent, and technical leadership and independence completely lacking, so this result isn't surprising. Americans or Brits sent through the same system and given the same management would produce similar results.
By the people who decide that work should be done by Indian engineers instead of those in the company's home country? The answer is more complicated. Most corporate management is extremely short-sighted; the incentives of the role demand it. Their primary incentive (handed down by their superiors) is typically lowering home-country head count, average salary (and in the US, especially those oh-so-costly medical and insurance plans), and other coarse personnel cost metrics. By these metrics, Indian engineers are not overrated. By the metrics the company will actually be judged by the competitive marketplace, which include time to market, total development cost, and product quality, they are overrated. Managers who think about these things will conclude that the cost of Indian engineers relative to what they produce has been bid up beyond fair value; i.e., they're overrated. But few do.