The main issue is that many students seem to have a difficult time understanding English, the language of instruction in almost all universities. Greg was at a university in southern AP where this was most pronounced: the professor lectured for 45 minutes in English. Then, recognizing that most of what he said was totally beyond his students, he gave a 15 minute re-cap in Telugu. Students are not receiving the full picture on two fronts - first, because a 15 minute summary does not compare with the details present in a full lecture. Second, Telugu just doesn't have all the appropriate words English does, especially in engineering or science disciplines. (aside: I have read articles about trying to "invent" Telugu words for modern research).
I was recently at a university screening the film, "Home," to increase environmental awareness. Students were reticent to offer their opinions in the discussion session, I assumed because they were embarrassed to speak in front of their friends or because they didn't really have an interest in environmental issues. The Indian guy with me, though, asked them to please speak out, "in any language." Still no one took him up on it, but after class the professor again explained that, even in this English-medium university, students had difficulty expressing themselves in English.
How, then, are all these students managing to graduate? We've also learned that the university grading system is - not surprisingly - completely different from the U.S. In many instances, small colleges are affiliated with a large name university. The main university sets a syllabus and writes an exam. All students across all the colleges take the same exact exam at the same exact time. Thus, all a student needs to do is study to a very objective test, that his or her own professor may or may not grade. Anything beyond the scope of the test is lost - the system takes "teaching to the test" to the extreme.
Our Indian colleagues at work were shocked when we explained that, in the US, two students can have the same major at the same college and not take a single class in common. They hardly believed us when we said that many high level classes don't even have exams - a grade is a combination of class participation in seminar discussions and a paper or project. They were incredulous to learn how much leeway an individual professor has.
Perhaps we need to take a broader view - perhaps we are missing something. Certainly at the highest institutions, what described above is not the case. But I can see a lot of room for reform at the mid-level universities that most students attend.