There were few good individual projects rest were given by the defense organisations, which were their problem specific. Actually, till graduation level, no one knows what research is and we don't have research environment, especially in Aerospace as every equipment was expensive. I remember our CSE department was top notch (VC was also communication engineer I think) and yes, we had a lot of funding. All the projects were funded by IST.
Overall we need time. The main issue was faculty. They were simple graduate at my time or retired professors, who already had stopped research years ago and were just teaching. Many of the faculty members were abroad for PhDs. I think many didn't come. Like Sir Asif who did PhD in some Vibration subject. Anyway, he was trapped
later
.
I guess we just need just researchers. Today, software simulation can do everything so not much funding is required and we can do marvels too.
P.S and you nearly our all graduates are either in defense industries, civil services, teaching or abroad for PhD. So I can say IA in 10 years IST will be different.