Russian electronics were given the wrong service

Russian electronics manufacturers are discussing with the Ministry of Industry and Trade the possibility of limiting state-owned companies in purchasing foreign electronics. Now the public sector often bypasses the requirement of the “second wheel” rule by holding tenders not for the purchase of equipment, but only for its installation, while installing foreign equipment. At the end of 2023, an increase in such tenders was recorded, due to which some Russian vendors lost up to 10% of potential revenue from the public sector. The Ministry of Industry and Trade says that work is already underway to solve the problem by changing legislation.

The Computing Technology Consortium (ANO VT; Aquarius, Yadro, Depo, etc.) is negotiating with the Ministry of Industry and Trade about the possibility of changing the rules of government decree No. 878 “on measures to stimulate the production of radio-electronic products in the Russian Federation.” Two interlocutors among electronics developers reported this to Kommersant. According to them, the proposal was a consequence of the fact that some state-owned companies hold tenders for “work” or “services” for installing electronics, which allows them to purchase foreign equipment instead of Russian. The proposal by ANO VT should correct this “legal gap,” the source says. ANO VT did not answer Kommersant.

A Kommersant source in the industry said that Russian electronics manufacturers applied to the Ministry of Industry and Trade for clarification of the situation back in the fall of 2023. Kommersant has read the letter from the Ministry of Industry and Trade, the Ministry of Digital Development, the Ministry of Finance and the Ministry of Construction to the industry dated November 2023. In it, the ministries acknowledge that “in the construction sector, the object of procurement is the work, which is why regulation 878 does not apply.” The Ministry of Finance did not respond to Kommersant’s request. The Ministry of Construction forwarded questions to the Ministry of Industry and Trade. “The letter signed by the departments listed in the request related to the issue of purchasing services for the reconstruction of buildings and construction,” the Ministry of Digital Development told Kommersant. “In practice, contract regimes are used that are not covered by Resolution 878.”

As Sergei Mordavchenkov, executive director of TPK Varton LLC (produces lamps), explains, in government procurement at the end of 2023, in tenders for the repair and construction of schools, hospitals or the installation of street lighting, there was a jump in the purchase of lamps for these tenders from China, although Resolution 878 presupposes the purchase Russian equipment. According to him, due to such tenders, their company lost about 10% of revenue in the fourth quarter of 2023, and if the legislation remains in place by the end of 2024, this figure could reach 30%.

The Ministry of Industry and Trade told Kommersant that in February a draft law was submitted to the State Duma, which provides for the priority of Russian products in the procurement of goods, works and services by certain types of legal entities. However, the bill in question only introduces uniform rules for introducing bans and restrictions on the purchase of imports by the state (44-FZ) and state-owned companies (223-FZ; see Kommersant on February 9).

The director of the consortium of Russian developers of data storage systems (RosSHD), Oleg Izumrudov, also knows about the initiative of ANO VT to amend Resolution 878. According to him, the problem with circumventing the rules for purchasing Russian electronics also exists in the segment of server and communication equipment. According to his estimates, in the segment up to 15% of purchases are made under the guise of ordering “services”. “This leads to evasion of property taxes, since the “purchased” equipment does not appear on the balance sheet, this is a violation of current legislation,” he believes. Mr. Izumrudov believes that changing Resolution 878 will accelerate the development of Russian electronics production.

Director for Relations with Government Bodies of the International Lighting Corporation “Boos Lighting Group” Evgeny Dolin emphasizes that due to circumvention of the rules of Resolution 878, many domestic companies that have taken subsidies for the production of electronics under the obligation to sell cannot fulfill the mandatory sales plan, from -for which they risk being investigated.

Timofey Kornev