I think answer lies midway. There would be some efficient groups in DRDO and many ineffecient. They way to deal with these is to identify efficient resources and privatize inefficent.
Though all that said, some amount of wastage will have to be tolerated in the name of self dependence. Although wastage is not same as inefficiency. We could try build some technology and then fail. That's wastage. Sipping tea and pampering egos is inefficiency.
Also the rooters of privatisation please note, research is not higly efficient activity. Even with Dupont, they introduced 6 sigma and then realized it killed innovation and then they rolled back 6 sigma in R&D.
Sometimes sipping tea gives bright ideas. Indians do get a lot of bright ideas often times. I am always curious to know where it comes from- at loo, while talking, while cursing someone.... like I get my best ideas when taking bath cheers..