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President of Russia Vladimir Putin: Mr Borisov, I would like to begin our meeting today by discussing the progress of the diversification of the defence industry. We have a plan that includes a timeframe and is connected with individual sectors and enterprises. Where are we at the moment?

Deputy Prime Minister Yury Borisov: Mr President, you are absolutely right. We are past the peak of the deliveries of weapons and military equipment under the state defence order, and the Russian defence industry has entered a smooth stage of deliveries.

Competition on the international weapons market is quite tough, which is why the financial stabilisation of our defence industry enterprises wholly depends on the civilian market. Therefore, we are acting in accordance with your instructions to increase the share of civilian output to 30 percent by 2025 and 50 percent by 2030, working in accordance with the schedule. I am ready to report on our results.

As of 2020, the share of civilian goods produced at defence industry enterprises increased to 25.6 percent from 24.1 percent in 2019, which is proof of a dynamic pattern. We are also making use of the systemic measures adopted by the Government to promote the sale of our products on the civilian market.

So, which measures are these? The most important of them are price preferences and a ban or restrictions on the purchase of foreign-made goods. We pin special hope on the amendments to federal laws No. 223-FZ and No. 44-FZ, approved by you and adopted last year, which regulate the acquisition process.

They stipulate the minimum order limit on the purchase of Russian-made goods. We have calculated them based on the existing practice. Incidentally, some of the vital products, for example, medicines, have been excluded from this amount.

Vladimir Putin: It was a long discussion.

Yury Borisov: Yes, it took us a long time. As you are aware, there were very many opponents to this law.

Vladimir Putin: How is it working?

Yury Borisov: We have statistics to demonstrate how it is going. Based on the tenders held this year, the amount of Russian-made goods purchased in accordance with federal laws No. 44 and No. 223 reached 78.6 percent.

To understand if this is a lot or little…

Vladimir Putin: What was it before that?

Yury Borisov: It was 50 percent in 2019 and 75 percent in 2020, so there is obviously a dynamic pattern.

Of course, there are apprehensions that low-quality goods can be delivered to the market. We are monitoring this to ensure that this preference works for scrupulous producers, so that Russian-made goods correspond to the best world analogues in terms of value for money and consumer properties.

Vladimir Putin: We also talked about promoting competition on the domestic market.

Yury Borisov: Yes, certainly. There must be domestic competition or else we will be on the downward path.

I would also like to add that we are pinning special hope on the serious, backbone projects that Mikhail Mishustin has reported to you about, which are stipulated in the long-term front-end strategy. The Russian industries and the defence industry are actively involved in this. These projects have to do with modernisation of public transport, the petroleum industry, hydrogen energy and electricity. We are preparing our proposals.

The measures, which are being taken with your assistance to support the aircraft and shipbuilding industries, specifically, through lease payment subsidies, have also produced positive results.

As regards shipbuilding – you are aware that historically it has been focused on military items – we have launched a major change.

Vladimir Putin: Just like in aviation.

Yury Borisov: Yes, just like in aviation.

As you know, construction of a huge shipyard is in full swing in the Far East. A dry dock has been completed at Bolshoi Kamen. We hope that you will be able to see it during the Vladivostok forum. The construction of the new super-powerful icebreaker Leader has begun there, and gas carriers are being built. In short, the project is well underway.

Such measures as the “keel quota” are being very effective, stimulating producers to take on civilian contracts. Overall, we are getting along all right. We hope that all your instructions will be implemented.

Vladimir Putin: Thank you.

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