Reasearch is an extremely capital intensive task and not just capital intensive but also there is absolutely no guarantee of ROI on that investment. Let's say I personally start a funding in IIT-K for economically viable production of CL-20. There's a strong probability that after 1-2Cr the only conclusion they get is
the available current technology is not mature enough for industrial production and that's it; there goes my capital. In USA, people have this passion for R&D where they'll sink billions of dollars even if there no economic prospect but we still have a long way to cultivate that appetite.
Next comes the processes and scrutiny; in USA you've things like Lunar Lander Challenge or Hyperloop competition where you just need a proof of concept and you can get as much a million dollars to further your research...as simple as it is. Tell me what would be the process if a group of students in some IIT asks for funds for an idea they've. And also the level of scrutiny they'd face if things go south.
And lastly, the funding agency. Take this example
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ISRO needed a piece of tech so they're ready to burn 20l in IIT-K, in hope of getting it. Now tell me how many such projects are currently active in all the IITs combined that're being funded by Army/Navy/Air-Force because they need a tech?