Partly because I have got bored of saying the same thing over and over again, partly because I wanted to crystallise my thoughts and partly because the rare successes have led to very pleasant associations, I decided to write them down. In what follows, I am assuming that you have a Bachelors or Masters degree in engineering, have reasonably enjoyed what you have learnt and do not have in your way unsurmountable impediments to persuing a research career (eg. a Significant Other who cannot stand academic types! etc).

Firstly, I think your doing a PhD in engineering is beneficial for the country, its industry and academia in more ways than you think. Secondly, if you are choosing between a well paying corporate career and an uncertain academic one, the latter is not obviously the 'wrong choice'. The rightness of your choice depends very much on how you measure satisfaction and remuneration. So here goes!

The nationalistic reason
At the moment, most PhDs in engineering are absorbed in academics, a small number goes to a few niche industries. There are many reasons for this of which I think two are particularly important:

1. Imagine that you run an industry that needs high end innovation and development. You have a futuristic idea and to realise it would like to hire a person who is a specialist. However, given the woefully small number of PhDs produced by the Indian system, the probability that you will find a specialist with the skill set you need at the time you need is very very small. So, the bottomline is that most industries will get tired of looking for Mr or Ms Right, give up and settle for somebody less specialised but maybe younger and willing to learn from scratch. In other words, the lack of supply of capable PhDs has dried up the demand!
2. This is a direct consequence of 'reason 1' happening over a long period of time. Since industries do not look for PhDs, the top tiers in influential industries are populated by people who did not necessarily enter the system with the training that a PhD in engineering has gone through. So, they do not clearly see the merits of that training and in fact, may have exaggerated ideas about the demerits. As decision makers, they therefore, do not always encourage the hiring of older, nose-up, insubordinate PhDs.

Given the lack of in-house ability, you would have expected a large number of industrially relevant problems percolating to the universities. But this does not seem to be happening in a big way. Though Indian engineering schools and industries are talking to each other more than they did in the past, they do not yet seem to appreciate that they should complement each other and understand their intrinsic differences in approach. Industrial problems are very often 'developmental' and short term. They are best solved in-house and lack of in-house capability should not be an excuse for pretending that they have the potential to lead to a PhD thesis! However, there may be (and often are) latent bottlenecks or sticking points even in a developmental problem that can and should be the subject of a long term research endeavour. Somebody within the system that generated the problem needs to look hard at the bottlenecks and realise the wider potential and identify areas of collaboration with academics. In other words, recognising a definite, well rounded research problem from within a short-term developmental initiative requires expertise and knowledge. Many a time I hear collegues complaining of industries looking at them as if they are 'cheap consultants with little to do at any point of time' ("TCS is too expensive, give it to IITK") and colleagues in the industries complaining that academics are 'sloths who do what they want to do and try to make you believe that they did what you asked them'!

The obvious solution to all the points above is to produce a much larger number of PhDs with skill sets and capabilities that the 'willing-to-hire-PhDs-if-they-deliver' industries will find useful. There needs to be a much greater synergy between industries and the academia so that industrial problems that merit deeper and long-term research will percolate to the acedemic arena and be worked on. Typically high-risk problems with uncertain outcomes will be persued by the acedemia and short term developmental problems will be handled by the industries themselves.

How do you fit in then? Imagine a large number of PhDs (maybe 100 times of what is being produced now) being churned out by various universities. A sizable proportion will come to academics and take part in continuing the process of churning out more capable PhDs. Some will go to industries, deliver based on their specialised capabilities, rise to decision making positions and will be able to spot 'research' problems when they come across one. They will also realise the need to offload such problems to the universities and will also discuss and interact with academics more meaningfully to ensure better conformity with their own goals.

The above scenario again assumes that out of the large number of PhDs produced, a good percentage will be capable. This, in turn means that the mechanism producing these PhDs, the current academic structure that is, is capable. But as the current academic set up is made of yesterday's PhDs, it is not enough to produce a large number of PhDs, it is imperative that PhD programmes are capable of attracting the best and most motivated students (i.e YOU!). Quality as well as quantity are both important though it should be remembered that, since we have not tried enough, we are not yet very good at judging the intrinsic quality of a prospective PhD student. The good news is that, at IIT Kanpur at least, we are keenly learning.

The personal reason
In India, many of our decisions are influenced by our families. Career is one of them. As I mentioned above, we are woefully short in terms of number of PhDs produced every year (roughly, in any major branch of Engineering, whole of India produces less PhDs than a middle level US university). So, chances that you have a close family member who is a PhD in engineering is low, that he/she is a motivated, satisfied Phd in engineering is even lower. So, chances that your family will encourage you to take up PhD is miniscule, that they will try to dissuade you are high.

But interestingly, for the 'nationalistic reasons' I cited above, better students should come to research as they enrich the pool, help in changing midsets about research and work towards making the whole cycle of things I have mentioned possible. Sadly, these are the same people who will have the more lucrative oppotunities after their under or post graduation and given the likely family advise, drift away from research. It might be a slightly irreverent but brave act to break the cycle and take the plunge.

At the moment, PhD in engineering is offerred as a major programme in the IITs and IISc, Bangalore. In all these places, living is highly subsidised, you get modest but cheap housing, messes and a salary that is not as discouraging as it used to be. People do get married during their PhDs and most places have small apartments for married students. Monetarily, if you calculate all the benefits that come with your PhD admission or an academic job, the gap between corporate and academic salries will become somewhat narrower. Almost all full fledged academics today (not yet the PhD students) have decent cars, can send their kids to good schools, can buy modest houses at or before retirement and can travel extensively both inside and outside the country if they are academically active. You get to meet a large number of interesting people and are always in touch with the younger crowd. It is basically a good way of stretching your adolescence by a few decades. I have not done a survey among the few PhDs who have gone into industry but by all accounts, they get paid well and have challenging assignments.

Most importantly, a good research training changes you as a person, makes you look at the world with a different set of eyes. It teaches you to be independent, to wade through problems on your own, and most of all, it teaches you the art of taking things to completion, sometimes single handedly. These are intangible benefits (and do not expect people who have not gone through the process to applaud you for acquiring them) but are immeasurably important at a personal level.

Let me now add a small rejoinder to square things up. The path through all this is seldom very smooth. An academic's life is full of ups and downs, uncertainties, lonliness and sometimes, frustration. Academic administrations in India have still not fully learnt to function in an atmosphere of hierarchy-free openness and you will often walk into people who consider you arrogant. Even if you can ignore or counter all of the above 'occupational hazards', you should know that your workload will be considerable (not the picture of 'having a easy time' that your friends selling soapcakes and toothpastes might jeer at! Quite the contary actually!) but flexible, independent, by and large boss-less. You will need to be sure and proud of what you are doing, and the pleasure of your creative freedom should compensate for the less money you will earn.