The Indian government has effectively just handed one of the country’s flagship defense projects the pink slip.

The Kaveri aircraft engine was conceived in the 1980s as the power plant for the indigenously developed Tejas light combat aircraft (LCA). While New Delhi has pressed on with the Tejas, itself a troubled program dating back to the 1980s, it appears to have lost faith in the ability of the Defence Research and Development Organisation (DRDO), the state-run R&D outfit that designs much of India’s defense equipment, to deliver a working engine for the plane.

Instead, the government has finally decided to buy engines from U.S. firm General Electric, as Defense News reported over the weekend. GE has already supplied engines for the Tejas Mk I; the Mk II, an improved version of the Tejas which is still in the works, will now also be fitted with General Electric power plants.

The Kaveri may not be completely dead. As Defense Minister A.K. Antony explained in a written parliamentary response last month, the engine may eventually power some of the Tejas fleet, and be used in Indian drones and “marine applications.” However, for a program that has soaked up $560 million in funding over the years, according to Antony’s own estimate, it’s an awful outcome.

The story of Indian defense is strewn with the wreckage of projects like the Kaveri: wasteful endeavours that were allowed to drag on for far too long, leeching the national defense budget and ultimately failing to deliver a capability that the military had any confidence in.

Defense development is prone to dysfunction in all countries: this is unavoidable when building capabilities that are both experimental and expensive. China has also found aircraft engine development an expensive and time-consuming business. But India’s problems are more acute than most. Everyone is to blame. The government offers little leadership, is far too soft on the DRDO, and has failed to privatize the country’s flabby and underperforming defence complexes. The military does a poor job of communicating its needs to the government and the DRDO. The boffins at the DRDO appear to be in a world of their own, working on capabilities that the military doesn’t want and didn’t ask for, and with no concept of time or money. And no-one is ever held accountable when it all goes wrong.

It’s a pity that Antony only made half a decision when it came to the Kaveri: he sidelined the program, but then failed to cancel it. Pulling the plug altogether would have been bolder, and probably wiser. Millions more may now be spent, needlessly.

The Indian government is right to want to develop these capabilities itself. It just needs to be smarter about picking the right capabilities to build locally; and to be braver about axing programs that aren’t succeeding. As for the DRDO, there has surely never been an organisation more in need of performance-related pay.

Has New Delhi learned the lessons from the Kaveri/Tejas experience? The proof will be in how it handles its next big aviation program, the development of a medium combat aircraft (MCA). A feasibility study on the new MCA was due to be completed by the end of 2011; nothing about its progress has emerged so far. India’s defense leaders may not get this one right either. But at least they know in advance many of the ways to get it wrong.