[A current Dual Degree Student (5 year UG+PG program) here, will be graduating in June] To be fair you are talking about Undergraduate students here, the very best of these go for post graduation in US universities. I know this, because I couldn't get it and a lot of my friends are currently there. And as far as I have been told undergraduate programs in US universities face a similar challenge when a significant chunk of bright students go for Financial and Consulting jobs (There was an article on HN that I am quoting; can dig it up if you want).

As much as I would have want to do research with full rigor and motivation, I find myself not as bright as those who I have seen being very successful. I still try to do as much as I can, hoping that my efforts will be enough. And I know that there are many many others who don't have a zeal for their research projects at all and I can give their point of view as well. IITs are the best place to for Undergraduate programs, they are very popular among parents and high-school students alike. If a student is not 100% sure about what he/she wants to do in life or if the parents are not open enough to let him try extreme things (in the Indian sense of occupation) like acting, fine arts etc, you give JEE and you go to IITs if you can. A lot of students find engineering to be just what they were looking for, a lot of others don't and do something else. As of research work, keeping aside the fact that IITs do lack the infinite resources that US universities have, we lack industrial connections and a research oriented culture for undergraduates. Not sure if US universities face the same kind of issues with their UG students or not, but I think it is unfair to expect a lot from UG students.

Now coming to PG curriculum and research there: I like my research project. I feel proud whenever the simulation ends and when my modeling results match my simulation results, and sad when they don't. Proper PG students (ie not DD students like me) in IITs work harder, much harder, than UG students. The lack of research output may be because the brightest of UG students get into US universities where there are better research groups and opportunities. Or may be because other engineering colleges from where the PG students have completed their Undergraduate programs didn't offer as much as IITs (or US universities do).

It is unfair to compare IITs with other institutes, there are a lot of factors at play. Sure, we want high paying jobs - but if they are available who won't? Think about the socio-economic pressure on the students as well. For a middle income family most salaries that are offered to IIT graduates will bring about a significant change in lives of these students as well as their families. It might be a different case in US (and other countries) but a lot of us face these issues. I was lucky that I don't, but I know many students with parents who will feel happier if their child settles down with a high paying job and not pursue higher education for another 2 - 5 years.

If you really feel so strongly about the issue, I really suggest you give back to an IIT (or your own alma-mater) in some way - donations (you can decide where exactly is your money spent), visits to share experiences and even research projects. I just did 2 Research and development projects in last two semesters - one was in collaboration with an external company. They were great fun!