Engineering is a professional course, not an academic course. The course needs to be such that it exposes engineering students to all the aspects of that profession. Most people believe, and it is not wrong, that you can get a wholesome idea of what the profession of engineering entails only if you get the right kind of exposure to real time applications of the theory you learn in class.
There are some concepts in any kind of engineering that get strengthened only if the student is put through a practical training of some sorts, which involves these concepts. The kinds of internships on platter vary with the kinds of engineering. There are civil engineers, mechanical engineers, software engineers and certain other specializations. Internships and the structure of these internships depend on your specialization.
There are many engineering colleges sprouting up in India. Along with the ones that were previously there the engineering colleges in India churn out a huge number of graduates. If the course structure remains largely the same, then the only way to get an edge over the other students is to back your degree with the right kind of experience. The engineering colleges too realize the need for internships in order to give their students a better grasp on the discipline. They encourage students to apply for openings in various companies. The students who undergo the internship come back to their college enriched. They develop a better grasp at things and are more likely to succeed in both academics and job interviews.
If every engineering student takes up a different internship every summer his/her experience by the end of their course would be unparalleled. All the various internships would also look good on their resume.