Their isn't one problem but a mix of several problems with the system or the pvt industry both
Private industry don't wanna put their weights behind a project which has no definitive future first of all for them it's investements gone to wast it no order given and it will take a long time to even succeed and get orders even if it gets orders while they can just do no r&d investment and just sell products with screwdrivergiri and get their share of profit so why invest in r&d as for infra HAL is providing them infra so it shouldn't be a question at all it's all about their will put invest
Our diversification plan is all lopsided. GoI needs to get out of small arms & ammo, uniforms, specialised equipment like parachutes, BPJ, body armour etc but they still have a presence there in the form of the OFB.
In highly specialized sectors like Corvette, Frigate , Destroyers AC & Submarine ( both conventional & Nuclear )construction we already have more than enough capacity within the DPSUs itself & on top of it we've the private sector involved.
For perspective, I read recently MDL can if need be set up 11 lines to build submarines. Do we intend using all those lines? No. Then what's the point in involving L&T for Project -75 I? It isn't as if we've a submarine building plan on the scale that China does of building 50 conventional subs & 30 odd SSBNs & SSNs.
Nor can we consider exports at this stage before we've demonstrated that we've complete expertise in design & construction of conventional submarines. Which in turn means our complete potential for building submarines is not fully utilised & is lying idle.
What we should've done is create an East Coast & West Coast Shipyard Limited by merging GRSE Kolkata & HSL & SBC Vizag forming the East Coast Shipyard & MDL, GSL & Kochi Shipyards into the West Coast Shipyard. If need be we could've gotten into capacity addition at these yards or innaugurate new shipyards on either coasts.
Just as we don't have 2 Shipyards to build ACs , we don't need 2 shipyards to build conventional subs. Look at Japan & RoK where 2 or more conglomerates have come together to pool in resources & build subs & even capital ships. Ditto for their Fighter Aircrafts.
While we're running around setting up parallel lines for FA & TF mfg typically in the afore mentioned countries 2 or more conglomerates have joined forces to create a single entity catering to those requirements.
Moreover how exactly do we expect the pvt sector to get into cutting edge , state of the art tech with no prior experience in this field. What we're doing thru such half baked measures is inviting the pvt sector to poach talent in the public sector.
A good example is the project in charge of the HTT 40 basic trainer in HAL went on to join TASL for the C-295 project. It's a good thing the pvt sector didn't respond else we'd probably be in a situation where neither the pvt sector has the expertise in spite of poaching talent to execute such projects & HAL being hollowed out of talent isn't in a position to execute such projects either.
For further perspective one should study how Titan hollowed out HMT.