1. For the most part, medical education is good in India. In the better hospitals you will find that doctors are generally very smart and knowledgeable. They also happen to be very practical when suggesting treatments and do consider the treatment cost as a factor when suggesting options.
2. The cost of living in India is lower when compared to the developed world.
3. The equipment cost and medicine cost is also lower compared to the developed world.
Also, please understand, India "is not a developed nation". Everyone there "cannot" afford expensive medical treatment. Yet, people who cannot afford expensive treatment "can" suffer from ailments like cancer, heart problems etc. I find it commendable that such people do have a fairly reliable option to save their life, however imperfect it may appear, compared to the system in the developed world. Standards will improve as the country develops, but for now, they offer a good solution.