Well, if they genuinely get the same benefit at 1/3rd the cost you're in trouble. More often the case is that you get the hours, but productivity is much lower in ways that are very hard to quantify and less immediately apparent. You can spend 10x as long working around bad design and bad code and chasing bugs and corrupted data as just getting it right. But "getting it right" isn't going to show up in any MBA's spreadsheet. Wage costs cut, margins up, long term projects fail, quality falls, customers flee but probably not before the people behind it has collected their bonus and moved on to greener pastures.
Having worked in both US and India, and having seen the software developed in both countries, I can safely say that the code written by comparably qualified developers is not that much different! Just like you are complaining about bad design and bad code, the developers in India also complain about the quality of code when they are handed code written by developers in US and asked to debug it and develop it further!
Agree on the productivity part, I would put the productivity at around 60-75%.
One thing I would additionally like to correct - "Getting it right" always shows up in the management KPIs as the cost of rework!