High entrance requirements are only one of the factors which define a good university. I'd say that the quality of teaching and the quality of research performed are more important than the quality of incoming students.

The IITs have a good undergraduate program, one of the best in the world. The graduate and research output of the IITs is nowhere as good. In fact , the research in particular is fairly mediocre, compared to say Stanford or MIT.

Couple things:

1) Considering there are over 1 billion people in India, IIT decided to "filter" students AFAIK

2) Scores are calculated by averaging all other departments, in which IIT might not even have or weak.

No they're not bias. If they are, then Waterloo University should be somewhere within top 10