Appetite came during import substitution – Newspaper Kommersant No. 193 (7394) of 10/18/2022

Import substitution plans in the Russian Federation are becoming wider as the consequences of sanctions are being studied, the authorities are already ready to support planned unprofitable projects built into supply chains. Their economic unprofitability is no longer a stop factor in the new model of industrial development, Vasily Osmakov, First Deputy Head of the Ministry of Industry and Trade, said yesterday at parliamentary hearings in the Federation Council. According to the department’s estimates, the portfolio of priority projects already requires more than 6 trillion rubles, comprehensive state support for the launch and implementation of projects, and guarantees for the purchase of end products. The participants in the hearings also suggested conducting an audit in the regions to assess the potential and needs of local industries.

Speaking yesterday at parliamentary hearings in the Federation Council, Vasily Osmakov, First Deputy Head of the Ministry of Industry and Trade, announced the government’s actual transition to a new model of import substitution: if until now it was only about economically justified substitution in critical industries, then under the sanctions, needs are expanding, and the government needs to “Learn to launch planned unprofitable projects.” Awareness of the scale of what is needed is also growing: the portfolio of priority investment projects is estimated at 5.2 trillion rubles. (164 projects in the chemical industry, pharmaceuticals, metallurgy, mechanical engineering), and taking into account aviation, shipbuilding and electronics, it exceeds 6 trillion rubles. As the deputy minister explained, this refers, for example, to the localization of the production of key substances for the production of vital medicines, the development of a universal component base for the automotive industry, and the “sovereignization” of rolling stock. Earlier, we recall that the Ministry of Industry and Trade intended to concentrate efforts on several key industries, but their needs, probably, made it clear that import substitution would have to be dealt with in related industries related to them by supply chains.

Support for enterprises is packaged within the framework of existing mechanisms, increasing the pace and volume of their implementation. Thus, under the R&D subsidy program (Decree No. 1649 of December 12, 2019), the same number of projects were launched in 2022 as in 2019–2021 (130–140 projects). Interest in concessional financing of the Industrial Development Fund (IDF) has grown three to four times since February due to a decrease in the availability of bank lending, which required additional capitalization.

Expanding demand for product replacement is pushing the White House toward clustered release support. All projects will receive comprehensive state support – tax preferences, subsidizing preferential rates and off-take (guarantees for the purchase of products). Under priority projects, companies will be able to receive preferential loans for up to 15 years at a rate of up to 5% per annum and state guarantees or guarantees from VEB.RF for banks. It will be necessary to allocate 126.1 billion rubles from the treasury for these purposes. until 2030, while in 2023 the budget provides for only 5 billion rubles – subsidiary programs reach a peak with a sample in the third or fourth year, Mr. Osmakov explained yesterday. The first loans can be issued already in November-December.

Under these conditions, reverse engineering becomes a key tool – the development of production according to existing imported samples that need to be repeated. According to the Ministry of Industry and Trade, there are more than 300 positions of critical components in total – we are talking about knives for conveyors of confectionery factories, as well as small engines, but for most of them it is possible to assemble and produce Russian counterparts. For this, enterprises will be able to receive grants for the development of design documentation for the production of dropped components, the Agency for Technological Development will deal with the issuance. The Federation Council also insists on the development of reverse engineering and “fast” R&D, while they are counting on an audit in the regions – an assessment of the real production capabilities of enterprises and the main directions of import substitution.

Diana Galieva