Monopoly is definitely bad but duplication of efforts should also be minimized and for India's size two competing Aircraft manufacturers can be maintained healthily like China has AVIC with two main subsidiaries Chengdu Aircraft Corp. (CAC) and Shenyang Aircraft Corp (SAC) and also other Xian aircraft corp, Shaanxi Aircraft Corp etc. If we want to go the PSU way then we should split them separately to foster some competition between them instead of single HAL make subsidiaries out of it, make the DPSU subsidiaries compete.
Or we can go the US way of IAF buying out the HAL and associated infrastructure but also leasing some of its facilities like how USAF leases its Aircraft Plants and some were even outright bought by private companies. This will keep the IAF in control of developments and help project easily and also reduce burden on private players making it easier for them to invest.
en.wikipedia.org
This plant of LM owned by USAF manufactures the F-35
en.wikipedia.org
While famous skunk works is located in this Plant with other private contractors.
en.wikipedia.org
Even in missiles ADE has been found lacking in Nirbhay compared to RCI. It is normal to find different labs having different standards in a large organization and after a time they become the culture of that lab. But periodically you should clear out and reset the non performing labs, but nothing like that happened in DRDO and no news is there on the supposed mega reforms in DRDO yet.
You can see in Bharat Shaktis on the shop floor episode of HAL and compare it with say TATA's C-295 assembly plant. There is no central HVAC in HAL Tejas assembly line, they have these large fans everywhere and floor itself did not look that great while for 5th gen aircraft the old school assembly HAL will not work, the tolerances required are crazy.
See this post to understand what I mean
Meanwhile US is making new investments and plants exclusively to manufacture 6th gen jets like this
The Advanced Coatings Center in St Louis is part of future military aircraft production system
www.aerospacetestinginternational.com