Industry groups complain that 90% of college graduates (75% of college engineering graduates) are completely unemployable. Not merely untrained, but not even worth training. One of the major industry training companies has recently increased their training period to a full 7 months.
Plagiarism is endemic and encouraged on every level, from the Dean down, even in graduate schools. Most students write papers by copying off the internet and citing "Google". Many "programming" students assemble programs by begging for "the codez" or otherwise copying "the codez" from existing projects. Professors rarely bat an eye when the entire class turns in the same work.
By comparison, in America, plagiarism is looked down upon and stigmatized from as early as the start of elementary school. It's still a major problem, but it's not socially expected in the same way that it's become in India.
In this kind of environment, it's not surprising that "coders" are being trained rather than "programmers". Programming is about problem-solving, and it's hard to teach problem-solving in an educational system that revolves largely around copying other peoples' work in place of solving problems.
A few of the best students manage to succeed -- after all, even a broken system can't stop some of the smartest and most motivated from succeeding. But even for them, the soul-sucking nature of such a system can hardly be encouraging, and it does no favors for their job prospects -- since being "Indian" carries the stigma of being a product of that broken system, even if you managed to become a great programmer regardless.
HN often likes to demonize traditional education, but the most important role of education is not to teach skills, but to teach you to think. That is the purpose of writing a 10-page critical analysis of a theme in a Shakespeare play, or building a toy memory allocator: not because knowing Shakespeare or being able to write malloc is important, but because it teaches students to think and analyze. By plagiarizing papers and programs, students completely miss the point of the exercise -- to learn to think!
Indian colleges are by and large failing this primary responsibility of education, and their students suffer as a result. In true cargo cult fashion, they have adopted the trappings of education without understanding the real purpose behind it.