Indian PSU research centers are well-known for being incompetent (including DRDO, CSIR, HAL...) [1]; in this ISRO is something of an oasis (or so I've heard). These orgs are generally neither nimble, nor particularly interested in acquiring talent, unlike their American competitors (or even NASA). Hiring is often one large nationwide JEE-like exam held once a year to recruit new engineers. Not surprisingly few Engine…
The assertions of incompetence of Indian PSU's are not without merit, although I think you are taking a rather pessimistic view of institutions. First of all, there are a whole lot of talented engineers in India, simply because of the population itself. Few go to the top colleges that you speak of and graduating from there doesn't necessarily mean they are the "best". So you can't take a lack of graduates from those…
That however does not contradict the fact that India's exam system also filters out a lot of smart people, and trains them really well... most of whom have historically have left for the US.