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The field of "Mechatronics" has changed from being an integrating vehicle for multiple disciplines, into a design philosophy. In the emerging scenario, mechatronics plays one of the key roles in innovative engineering. Because of the integrated multidisciplinary approach, the scope for innovation in product engineering is ever increasing. With rapid changes in technology and more applications becoming real-time and embedded, teaching the mechatronics course only through laboratories or course projects is not sufficient. The leap from the traditional sequential design approach to the mechatronics philosophy is very big. Added to this are the various definitions that have evolved and the various methodologies developed for the mechatronics system design. Mechatronics is at a stage of evolutionary process of modern engineering design and involves systems thinking. "V-cycle" is a prescribed industrial process for mechatronics. It is a graphical construct used to communicate a model-based design and development methodology. If mechatronics system design is accepted as an evolution of engineering design, then a formal perspective design process can be developed and the course delivery can be effective with project based approach. This paper outlines the results of international collaboration between the two institutions on the perception of mechatronics as a modern design philosophy emphasizing team dynamics, project based learning and integration of disciplines. The collaboration was initiated by Indo-US Collaboration for Engineering Education (IUCEE), a US based nonprofit organization promoting quality and collaboration in innovative engineering education.