>>I will not go as far as saying that India is the last place which values meritocracy
The issue isn't just limited to software companies. You see in a country like India question papers leak, people cheat in exams. Teachers have their favorite pets at schools and colleges whom they reward with marks unfairly. What happens when a populace of this kids goes to do jobs? They bring the same culture everywhere. Which is why you will see every one wants to cheat at everything.
Everything from cheating at taxes(fake rent receipts), jumping traffic signals, promotions at office, voting for wrong interests, bribes, corruption etc etc. This permeates to every aspect of our nations very existing character.
People, society and governments have wrong priorities in India. Most think building roads or some fancy infrastructure will solve their issues.
In reality Human resources are what matters in building a country. The rest happens on auto pilot.
I won't say everything on west runs on Merit. But the situation is definitely better than India in my experience. Most importantly I have seen better the quality of human resources better a country turns out to be.
My guess is India will take a lot of time, several decades, may be even centuries to fix its core issues.