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Import substitution policy was enacted four years ago, and since then Russia has established special institutions, such as the Industry Development Fund (IDF), entrusted with providing support to local manufacturers. The federal government reports that Russia currently has about 100 import substitution projects.
"The share of Russian products has increased dramatically in transport and heavy mechanical engineering, oil and gas industry, machine-tool building, radioelectronics, and pharmaceuticals. Over the past year, local car manufacturing increased by almost 20%, including global brands. We are implementing technologies for the production of new components and, therefore, are creating the foundation for increasing the share of locally made parts in assembled products,"
Prime Minister of Russia Dmitry Medvedev pointed out.
Components manufacturers need to establish a supply network that would service not only domestic demand, but also expand into foreign markets. The Ministry of Industry and Trade of Russia points out that local companies should work on fitting into global added value chains, and the government will provide relevant assistance through state support mechanisms.
"Many Russian-made end products include a significant number of imported parts. In order to facilitate localization, in July 2017 the IDF launched a special Components program seeing to stimulate manufacturers of highly sought-after components to build new and expand existing production facilities in Russia. The program offers manufacturers unique loan terms: just 1% annual interest rate over the first three years and 5% in the next two years,"
IDF Director Roman Petrutsa stated.
Russian enterprises are gradually launching new items for the aircraft industry. In Tver Region, JSC Hamilton Standard-Nauka (joint venture of Scientific Production Association Nauka of Russia and UTC Aerospace Systems of the United States) will organize the production of unique heat exchangers for Boeing 787, Boeing 777, and Boeing 767 Freighter. Project investment will exceed RUB 800 mln. Its implementation is regulated by a special investment contract with the Ministry of Industry and Trade of Russia.
JSC "Permsky zavod 'Mashinostroitel'" is working on a new project in the Kama River area. The company plans to use its facilities to manufacture thrust reversers from polymer composite materials. The product will be used in the new PD-14 aircraft engine.
The cost of launching the reversers into production constitutes RUB 191.3 mln. The IDF will provide part of the required funding (RUB 94 mln).
"IDF funds will be used to prepare production facilitates and develop and test new engine designs for civilian aircraft. The addition of civilian products will provide us with the opportunity to diversify our production and lower risks related to the reduction in defense production," plant representatives shared.
JSC "Kostromskoy zavod avtokomponentov" developed an import substitution project in mechanical engineering. The enterprise intends to build facilities for the production of cylinders and piston-pins for diesel engines. Presently, industrial companies have to procure these products and some other parts from overseas. IDF provided its funding in order to remedy the issue.
"Financial support provided under the Components program will enable the company to build facilities for quality mass production of cylinders, pins, and related products in Russia and dramatically increase the export of these items,"
Director of "Kostromskoy zavod avtokomponentov" Sergey Kalashnik explained.
Target annual capacity is estimated at 580,000 cylinder sleeves and 1.25 mln pins. Total project costs constitute RUB 432 mln. The IDF provided a RUB 200 mln loan. It is expected that manufactured cylinders and pins will be used by Russian and foreign car makers in their internal combustion engines. The plant intends to produce components which will comply with Euro 4 and Euro 5 emission standards.
One way to strengthen cooperation between components suppliers and their clients is to participate in specialized B2B events. At these meetings, small and medium enterprises may obtain information on available state support mechanisms and the needs of major customers. INNOPROM-2018 will incorporate B2B meetings into the Second Industrial Supply Forum.
Its priority areas include machine-tool building, heavy, road building and agricultural machinery, and oil and gas equipment.
The event will start with welcome addresses delivered by top officials of the Ministry of Industry and Trade of Russia and Forum partners. Then Forum participants will proceed to the main part of the event - B2B meetings scheduled for July 10-11.
First Industrial Supply Forum was held at INNOPROM-2017. It accommodated approximately 200 meetings between large companies and suppliers / Photo courtesy of innoprom.com
The following companies will participate in the Forum:
• STAN Group;
• DMG Mori – Ulyanovsk Machine Tools;
• Lipetsk Machine-Tool Plant;
• Perm Factory Metal Centers;
• Pumori-Engineering Invest;
• United Engineering Technologies;
• St. Petersburg Tractor Plant;
• Road Machinery Factory;
• Galich Mobile Cranes Plant;
• Kovrov Electromechanical Plant.
The deadline for submitting applications is July 4. A comprehensive list of priority components for commercial clients and terms and conditions of Forum participation are available at INNOPROM-2018 website.
The Forum will wrap up with a special session which will bring together directors of relevant departments of the Ministry of Industry and Trade of Russia and representatives of clients and suppliers. Session participants will discuss Forum results and topical issues of improving cooperation between companies as an instrument for promoting localization and import substitution objectives.
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