How much of education is about skills and how much about knowledge?
Perhaps the question is badly framed.
In any case, a thinking person will recognise that both parts of education are important. A more skills oriented person will recognise that acquiring knowledge and docketing it in a way that allows us to utilitise it later is an important skill. On the other hand, one who pursues knowledge will concede that a good part of our knowledge is the result of attempting to codify learned skills.
However, like any other "versus" discussion, the pendulum periodically swings one way or another. In my opinion, currently, students in India (and those who fund them, i.e. their guardians and parents) are looking for skills-based education. Rightly or wrongly, they believe that this is what will put them ahead in the job market. In my opinion, that is why a large number of students wish to enrol in "engineering colleges" instead of "universities". The latter are seen as being primarily the disseminators of the collective wisdom of the ages, while the former are seen as places that will teach them the skills that will be "useful in jobs". It is perhaps thought that with Google, Wikipedia other source of information, it is no longer necessary to learn "stuff"; it is more important to learn skills, especially if one of those skills is that of finding useful stuff from the store-houses of information.
Students who enroll in engineering colleges and their avatars are thus very disappointed to find that (in a large majority of cases) these places are just universities in disguise. This is doubly so in elite institutes like the IITs since the instructors there are usually "pursuing knowledge". There is a repeatedly expressed feeling in diverse student fora that universities are "factories operated by professors to generate more professors". Given the paucity of qualified teachers and researchers, this is not necessarily a poor goal --- even from a job-oriented point-of-view. However, students who join up for a technical education do not see "professor" or "researcher" as one of their career goals! 
|||Of course, we could attempt to convince/brainwash some of the students into pursuing these laudable careers, but that is not likely to succeed in a majority of cases.|
A natural consequence is that most such students are not too interested in the kind of value addition that they get from such places and are more focussed on the "hereafter". At the other end of the chain, the companies that hire students are primarily looking for "smarts" and "brights"; hence, the performance of the student in a national level competitive examination (like JEE or CAT) is far more important to them than their grades. The latter, after all, are primarily an indication of how well they have acquired knowledge which the companies are (mostly) not going to make use of!
All of this is to argue that technical institutes in India (which includes IISERs since we are called CFTIs --- centrally funded technical institutes) should (IMNSHO) have more courses that attempt to impart skills. Primarily, this means that we should be oriented towards "problem solving" rather than "information dissemination". Older readers will recognise that this is an old mantra; the Deity/Devil is in the details of how we implement it.