The IIT directors have proposed this radical idea based on using board marks for shortlisting to admission to IITs.
Entrance exams were made necessary because of several reasons, (a) corruption in the board (or university) exams (b) lack of any need to real talent to secure above 90% in board (or university) exams in some states and (c) wide variation between the marks of the state (or university) board.
Thus, JEE (and later GATE) was introduced. The first reason can possibly not be serious because these candidates will hopefully be weeded out of the system during the course work in IIT. However, this is not the solution to arrive at a corruption free board exam. The second reason is more serious because the student only mugs up the material and does not really understand anything. This is true in many universities offering B.E/B.Tech and if one solves the last 10-20 years question papers, that is sufficient to get a good score. Thus, entrance exams were supposed to test the ability of the candidate. Unfortunately, due to the predominance of coaching institutes, it is no longer possible. The last reason i.e., of the wide variation in the marks of the boards is possibly more difficult to solve. Students from different state boards perform in a very diverse way in these exams and the statistics show the performance of the students from different state boards are vastly different. Hence a proper normalization will be a tough task. A simple percentile representation from different state boards might look democratic but will not be accurate.
I do agree with some importance given to board exams (maybe as a filter) and then having only one exam for all institutes in India. Board exams should be used only as a filter and the marks should not be counted for admission for the reasons outlined above. However, due to the reasons outlined above, I am not sure whether any radical changes to overcome the "coaching classes" syndrome is a good idea because coaching will now adapt itself to "tuition classes" for board exams.