You are discounting PSUs. It is unfair to simply assume that private sector is the only MIC possible. In fact, countries like China, Russia have shown that PSU can work well. It is only the western capitalist countries that use private industry for everything.
In USA, Govt funds all research and development but via private companies like LM, Boeing etc. F35 is fully funded by pemtagpe and the LM is simply delaying it. The accountability shown by private companies of USA is not higher than the public companies of Russia. In fact, all the risk is borne by govt while all the profit is borne by private companies. Such a situation is counterproductive.
India does have military manufacturing base and makes many things on its own - Radars, missiles, ammunition, torpedoes, ships, aircraft like Su30 and Tejas, tanks like T90 etc almost completely in India.
India needs imports only in a few segment like aircraft engine, helicopter engine, diesel and gas turbine engine of ships which are all under development. The lack of technology is what causes India to import rather than lack of manufacturing.