They make small arms optics as well.
ALPHA DESIGN TECHNOLOGIES PVT. LTD.
http://www.adtl.co.in/nvd.html
http://www.adtl.co.in/product.html
That pdf isnt working.
There is private involvement already. The guy who made this video -
Indian Multi Caliber Individual Weapon System (MCIWS) Prototype | Tune.pk
said in another forum that ALPHA DESIGN TECHNOLOGIES PVT. LTD. from Bangalore engineered the Multi Calbier Rifle in trials...
Saurav Jha's Blog : Interview with the Chief of DRDO, Avinash Chander -Part II
From his tone, it sounds like small arms isnt even that important, didnt even mention multi cal rifle.
Wouldnt mind tying up with private firms.
ARDE develops final version of modern carbine - The Times of India
PUNE: The Armament Research and Development Establishment (ARDE) has developed the final version of the modern sub-machine carbine (MSMC). The carbine will be useful in battlefield as well as urban warfare.
Anil M...