The best Indian research institutions like IISc and TIFR don't teach undergraduates, and the best Indian undergraduate institutions (IITs) don't do much research.

Both research and undergrad teaching are required in the ranking. Honestly though, IISc is the best indian institution and will barely crack the top 100 research institutes in the world.

The methodology states that 60% of the rank is based on research and citations. There just isn't as much research and papers being published in universities such as IIT as there are in other universities in the world. Few universities in India pride themselves on being research institutions.

You didn't read far enough ... clocking in at #235 - Indian Institute of Technology, Kharagpur