While your logic here is correct in manufacturing costing in general, it's not what the MIC has been doing. I deal with the BAE's, the Oshkosh's, The Raytheon's and the Lockheeds of the industry.
They have become bloated, retarded, companies with a competency problem. They have been sold Jeet ERP systems that can't keep accurate track of anything, the people in charge of procurement and supply chain are barely literate and the entire process of procuring everything from a bolt to a missile system is broken. They've surrendered their production systems to AI, ECI and other automated systems which clutter up supply chain workflows with mountains of shit and make planning and forecasting impossible for everyone.
Some, like Honeywell, have been infested with Jeets as well. Before you pull the "haha, you retarded raisin, these are classified items, they can't have jeets!", I'm here to break it to you that Indians are perfectly fine with having ITAR and ECCN classified information handed to them, provided the proper licensing is in place for both internal and external personnel. And they've flooded the DDTC and BIS systems with Jeet workers to do this paperwork.
They're also hamstrung by things like DFARS, which, in the context of my career, means that if they order 1 bazillion widgets, all those widgets have to be made from domestic material and can't come from outside the US. Which is great in theory, but in today's world, there's very few places that make domestic materials (Aluminum, Steels, ect...) and it ends up being a bottle neck for everything as 20 different suppliers all wait their turn for a Mill run of MIL-A-46000 armor from one of the only
