No thanks.
1.) Its myopic to turn DRDO into just a "Missile & Nuke specific unit" because that is your perception of DRDO's success. ADA is not successful? What about LRDE? CAIR?
2.) Privatization is not a panacea. Give the newly formed PSUs at least a chance to show if they are worth keeping as PSU before you sell them to the highest bidder! Do we not have good PSUs in India? Straight away you want to sell 51% stake? First try and sell less than a controlling stake and see if maybe that works wonders?
3.) Private industries are in no position to absorb the kind of R&D budget that DRDO has, nor will they give you bang for the buck. Don't expect the likes of Mahindra and Kalyani to magically start doing better than DRDO in R&D when they haven't shown any appetite for it yet. Don't expect TATA to design a better TEDBF than ADA suddenly out of the blue. Who will be responsible if this move is used by some money-minded businessman to build a company from remains of DRDO and then sell it to the highest foreign bidder? Aren't we seeing our new startups being snapped up by foreign investors, with the startup founders simply taking a hefty payment and calling it a day? Do we have a law in India that prevents sale of strategic industries to foreign entities like they have in USA?
Indian Armed Forces CAPEX is less than that of the British, and a big pie (36% this year) is meant to go towards imports. What kind of Private Defence Industry has Britain been able to sustain with its military CAPEX? They have to run to Europe or USA for any major defence project, be it fighter jets or destroyers. And you expect Indian Private Enterprise to do wonders with DRDO's meagre budget? Please don't behave like Monkeys, aping the West blindly. Russians and Chinese don't need private enterprises for their defence needs, yet they are powerful enough. We need to find our own model that works for us. Asian Tiger economies didn't become Tigers because they blindly copied the West. They became succesful because they found the perfect Mixed-Economy balance between a purely Planned economy and a purely Capitalist economy that worked for them. "Privatize everything and hope for the best" is the fool's solution. Its not even a proper solution, just a blind hope. In a country like ours, where the Media, Judiciary, Political parties, etc none of these have a policy of nation before self, in such a country, implementing policies that work in the likes of USA is beyond stupid. First fix the judiciary before you set out to sell Country's crown jewels like DRDO in the open market?
Yes DRDO needs improvements, but simply selling it to Private Companies because you can't be bothered to think of solutions is just lazy on your part.
The new model we now have, where DRDO sells its tech in competitive technical bids where DPSUs and Private firms alike can bid, and where such a DRDO-Industry alliance can face open competition from Foreign-Indian Private Sector JVs for Defence contracts, is perfect for now. Give it time to produce results, and if the results are not to our liking, then we iterate. After each iteration, we are supposed to observe and course correct before the next round of reforms. Instead of fanatically holding on to random assumptions like "Privatization is the silver bullet".
K5 with MIRV?
. Babu's may enjoy in their allotted houses but others don't have such luxury. But I like that both army cants and Ordance factory have greenery in their area. 
