The IITs are exclusive more due to differentiation created up front at the time of the entrance examination, and less due to amazing academic inputs at IIT! The competition amongst intrinsically bright students simply creates a natural atmosphere of learning that is self-sustaining.
Also, there are 2 kinds of people who emerge.. those who go abroad for further studies, and those who get absorbed into jobs here. We need more of the latter and less of the former.
Now, given this, it really is a good idea if the number of IITs were to increase. As the total throughput increases, so also those employed in India. We just need to make sure that a couplfew things are ensured while making this transition...
1) The rigour of the entrance examination must be preserved. A diluted entrance exam will only dilute the quality of intake
2) Even now almost 400000 students take the exam. The real differentiation is amongst the top 100 or so, after that the difference is marginal at best. We need to create a means to differentiate better if the intake is to increase
3) An process of incentivising students to take up jobs in India while disincentivising going abroad should be created
