I have been following this thread, and couldn't resist replying any longer.
Anirbit Mukherjee's document regarding CMI physics seems to have become quite popular among prospective physics students. To them I'd like to say: Anirbit's opinion is the one which is highest ranked by google, not necessarily the most qualified or even representative. I urge you to actually contact current students, other alumni to get a more balanced opinion...
(I am planning to write a similar document myself, soon as I overcome procrastination

)
As to my opinion about physics at CMI, and India in general, let me first say that I am a final year physics student at CMI. I think that I had a really wonderful undergrad experience here. I got to meet some really great people, including faculty and students at CMI, IMSc. Although there were some good and some bad courses, I think overall I benefited a lot from the education here - and I managed two really good summer internships through faculty contacts. There may be some issue with placements, but till now several CMI students have made it to TIFR (all physics depts.), HRI, and good-ish places in US and Europe. (I'll find out about my fate in a couple of months

)
I believe that over the past few years, a lot of excellent opportunities have come up in India for studying science. Along with IITK, IITM also has a good physics program, and there are some good people at
all the IISERs (including Mohali and Bhopal).
Regarding doing UG abroad: First and foremost, outside the US, I know of no place that gives scholarships etc. for undergrad students to study there (if you're even vaguely aware of international affairs over the past two years, you'll know why). The living expenses in all these places can go upwards of INR 20 lakhs (US$ 40,000) per annum. In my humble opinion, the education is
not worth this kind of money (remember you're going to be a physicist earning a pittance, not some IT company tycoon).
That leaves us with US. Every year in India, there will be a super-lucky few (olympiad medalists et al) who'll get full-funded placements at MIT, Caltech and the likes. For the rest who get rejected, do NOT make the mistake of thinking the world has ended (I almost did that back then). You still can get a great education in Indian institutes.
I would like to make one more point: it is far more important what
you do at an institute, than the prestige/quality of the institute itself. You can go to Stanford and get totally wasted, or you can go to Pune University and graduate with a couple of publications in hand.
Finally, @
mohsen above: I really don't know much about issues involving immigrating from Iran to India for UG (I know people who've come here for PhD), but I do know that CMI at least does accept international students and they also get tuition waiver/scholarships etc. I don't know about other colleges, but I would recommend against Ferguson College Pune and St. Xavier's Mumbai, they do not really have an academic "culture", they're known more for their events and parties etc. You can still do well there, but avoid them if you can.
</rant>
Hope that was helpful (really sorry about the length...), and feel free to PM me for more details.