The private sector
can support the armed forces, but it'll only happen when the armed forces decide to support the local economy.
@JamD clearly brought up the example of simple stuff such as screws and bolts. If the armed forces can't even open up that -- even though the private sector can definitely supply it -- then forget anything more. There isn't going to be any growth in our industry, we'll instead scurry off to China or Europe and help their industries.
The right policy is to open up the supply of inputs to the private sector and
incentivize them to expand their capacity and develop new products.
It starts with low-end stuff like nuts and bolts, but it gradually moves up to fuzes, polymers, composites, steel, and eventually to complete parts, structures, etc. It culminates in entire systems.
If they get the simple business, they'll build capacity to meet the need and, in turn, use the proceeds to grow and get better. That's how business works. It's been like this for thousands of years, but only fails when there's an unnatural element in the mix -- like gov't sanctioned monopolies, rent-seeking, etc.
Our problem is that we think it'd be a long process, and yes, we could be looking at 15-20 years. But that was true back in 2000, and back in 1980, and back in 1960, and even in 1947. In fact, in 1949, we got close to starting on the right path when the PAF was working with a tycoon from Hyderabad-Deccan to bring the P-80/F-80 production line (starting with assembly and moving to manufacturing) to Pakistan.
But that program failed because some babus decided it was a better idea to pick up the Supermarine Attacker from Britain. Herein lies the problem. We got babus who'll throw up excuses like "urgency" and what have you to burn precious hard currency on foreign goods without even as much as an offset deal (which could see at least some of that money return to our economy).
Today, we have a willing South Africa wanting to partner with us to co-develop tech -- and we know they've got expertise on rockets for AAM/SAM, turbojets for LACMs, etc -- yet we're ripping our hair out on how to improve on the SD-10. And to climb to the next step, we're willing to take on an even bigger expense for something we may not need, even though we can spend less and collaborate with others.