The Russian economy needs a global transformation to develop the country’s technological, production, economic and scientific potential. The focus on independence and import substitution, including not only strategically important sectors, has become a strategic national priority. Numerous economic sectors, from construction and pharmaceuticals to IT will have to embark on a new course. Participants in the Strong Russia business summit in Moscow have discussed the conditions and drivers of reaching technological sovereignty. Denis Kravchenko, first deputy chair of the State Duma Committee for Economic Policy, moderated the plenary session.
Focus on regional cooperation
Industrial cooperation might help to support import substitution in the real sector, and ultimately the achievements of the country’s technological sovereignty. According to Vice-President of the Russian Chamber of Commerce and Industry Dmitry Kurochkin, this refers to assisting the implementation of numerous projects aimed at creating complex systems of import substitution. At the level of the regions, the activity is supported by the country’s chambers of commerce and industry.
In particular, with the participation of the Russian Chamber of Commerce and Industry, the Subcontract Exchange was successfully held at the Expocenter; it was decided to make it an annual event. In this case, it is not just the implementation of long-term contracts, for numerous issues are related to long-term partnership, building communication at the regional level between enterprises and entire sectors.
In turbulent times, it is important to develop industrial cooperation at the level of the EAEU in the most effective way as well.
“Interaction with the member states of the Eurasian Union, first of all, with Belarus and Kazakhstan, will become an important area of industrial cooperation,” Dmitry Kurochkin notes.
The Russian Chamber of Commerce and Industry has also suggested creating a network of centers of technological supremacy, which will also help to implement breakthrough innovative projects.
Amid sanctions pressure, entire industrial sectors have found themselves in a difficult situation. The building of new and expanding existing supply chains – for instance, with China – will help remedy the situation while facilitating technological sovereignty. According to the President of the Union of Chinese Entrepreneurs in Russia Zhou Liqun, plans call for boosting the deliveries of cars and car parts to Russia, as well as electronics and consumer goods. According to his estimates, Chinese automakers export 20% of its products to the Russian market, making it a priority area.
Currently, according to the statistical data provided by Chinese customs services, Russian imports from China have been declining. Yet, its dynamic growth may well be facilitated by lifting COVID-19 restrictions as well as opening new border checkpoints. During this year’s first five months, trade between Russia and China grew by almost 30% and exceeded $65 bln, the National Bureau of Statistics of China reported.
Taking a cue from pharmaceutical industry
Russia’s pharmaceutical industry serves as a good example of import substitution for the country’s other sectors. Some 20 years ago the industry was literally nearly destroyed and almost fully dependent on imports, while today 60% of packaged medications sold in pharmacies are produced domestically, said Yevgeny Nifantyev, member of the Russian State Duma’s Committee on Industry and Trade. This has been achieved due to consistent efforts by regulators as well as the Pharma 2020 program, with 40 advanced pharmaceutical plants built in a decade.
“Today, as much as 71% of the items on the list of essential medicines are manufactured in Russia,” Yevgeny Nifantyev emphasizes.
Domestically produced medications are on par with the best foreign equivalents in terms of quality, efficiency and safety.
The next very important step should be localization of pharmaceutical substance production in Russia, which currently purchases them from China and India. However, amid economic sanctions and the COVID-19 pandemic effects, it would be more reasonable to minimize the import dependency.
Focusing on startups
Technological sovereignty cannot be achieved without developing domestic information technologies and software. With a surge in demand for the latter amid the sanctions and withdrawal of foreign technology companies from Russia, startups are willing to help achieve the task. The Russian Fund for the Development of Information Technologies (RFRIT) is responsible for supporting Russian developers through grant financing.
“The fund has already received over 650 applications from IT companies as part of the competition to receive grants for domestic software development,” RFRIT General Director Alexander Pavlov said.
The fund will have to seek customers for all the projects and present them to the Russian IT industry.
Alexander Pavlov mentioned that developers can apply for grants through the Unified Portal of Public Services, which makes the application process considerably easier. Co-financing conditions have also become more favorable: companies now have to invest only 20% of the project cost, while previously grants covered only half of the amount. The maximum amount of grant co-financing has increased to RUR 500 mio ($8.3 mio), and particularly significant projects can attract up to RUR 6 bln.
The fund also serves as a platform for communicating with the IT industry. During three months, companies submitted about 9,000 requests and offers regarding both current market risks and new opportunities. This, in particular, has allowed for finalizing the relevant regulatory framework.
Providing mutual support
Close cooperation between the government and business and industry representatives should become an essential condition for achieving import substitution objectives and the national technological sovereignty. This is a format that will actually allow for developing a new economic system to efficiently respond to current geopolitical and economic challenges.
We should not forget about the society’s support of the process, which has always remained a key for general development and growth – and particularly so with the country now facing a complicated historical challenge that requires unity.
According to Denis Kravchenko, amid a new global crisis and political and economic pressure, success comes to those who can make a proper and adequate assessment of the situation, define priorities, focus resources, and provide conditions for advanced development.
“Winners are those who manufacture their own products and create world-class competitive goods without cutting themselves off from the world,” Denis Kravchenko concludes.
By Olga Blinova