Investing in Higher Education and Scientific Research has long been viewed as essential to the development process. India invested early and strongly in both Higher Education and Scientific Research, with the explicit objective of economic development. Higher Technical Education (HTE) in India today faces at least three challenges. First, the last twenty years have seen very rapid growth in private HTE with the number of engineering colleges and engineering enrollment growing at 20% a year. These have contributed directly to India's abundance of engineers in general and software professionals in particular, but raising their standard of quality is a pressing concern. Second, select HTEs have provided a world-class technical education at the undergraduate level. As Indian industry seeks to move up the value-chain in technical competence, they increasingly need better graduate engineers. Third, although India was an early investor in scientific research, this investment went overwhelmingly into autonomous Scientific Research Institutions. Although much of this investment was explicitly justified based on potential benefits to Indian industry, studies have repeatedly showed little contribution. The end result of doing scientific research in autonomous institutions has been for research to bypass the university system, which is where countless studies from countless countries say research should be done. Any attempt to reform the Indian scientific research system which does not address this core issue of combining public research with teaching will be fruitless, and this paper suggests how the Indian research system can be reformed.