(I am Indian and I have friends in the IIMs).

Scarily enough these guys are serious. They think they are actually doing something "cool". The whole idea seems to be that "real hackers" (note the quotes) would feel "challenged" by such an environment and buy into it. After all why else would they want to attend a google interview? (ignoring the fact that Google India is no where near as cool - in terms of work done or quality of people hired - as Google California).

In short this is just managers living in their own fantasy world. No real hacker would take these guys seriously.