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President of Russia Vladimir Putin: Mr Manturov, unfortunately, we have so far failed to overcome all the consequences of the pandemic and continue to fight this disease. Nevertheless, the economy and its real sector are recovering. What can you say about the situation in the industry?

Minister of Industry and Trade Denis Manturov: Mr President, first of all, I would like to thank you for the targeted system-wide anti-crisis measures in 2020, which made it possible to begin a fast-paced recovery already last summer. The results for 2020 show that the processing industry posted a minor 0.6 percent growth. It also became possible to prevent the dramatic consequences that many experts predicted for all sectors.

For obvious reasons, the pharmaceutical and medical equipment industries grew by 23 percent, faster than the rest. But other sectors, including the chemical complex, the textile industry and even furniture manufacturers, posted growth of about 5 percent. As I have said, although not all industries are growing, we have posted 0.6 percent total growth.

We were mostly concerned about the automotive industry, which curtailed production by 17 percent at a time when other countries posted a 50-percent slump.

A rapid recovery is currently underway. In the first four months, the automotive industry grew by 40 percent, and this figure is for passenger vehicles alone. The entire processing industry grew by 4.5 percent in four months. Therefore, we are expecting to reach 4 percent in the first six months of 2021. We also hope to maintain this growth rate until the end of 2021.

This was made possible by the targeted systemic measures, as I have mentioned, and also thanks to the experience of the 2008 and 2014 crises, when systemic measures were charted. Those measures formed the foundation of the industry policy law that you actively supported in 2014. This does not amount to an anti-crisis approach alone, but, most importantly, it stipulated the introduction of development tools.

The main course set by you was on import substitution, and over this period more than 2.8 trillion rubles have been allocated for these plans and their implementation, considering that for every ruble invested from the budget, there were five rubles of private investment by businesses. This means that this motivational programme was already being implemented quite actively.

Vladimir Putin: Transport machine building is already at 90.7 percent.

Denis Manturov: Yes, these sectors – transport machine building, energy machine building – are…

Vladimir Putin: Thechemical industry.

Denis Manturov: …at over 80 percent.

The pharmaceutical industry has doubled, and even food machine building.

Vladimir Putin: Electrical engineering.

Denis Manturov: But the availability of the network of engineering centres was an important mechanism in achieving these results. This is on the next slide.

Since 2013, when we launched this programme in 40 regions with the Ministry of Education and Science, 83 such centres have been established at engineering universities. Here is one of them – I travelled to Novgorod Region in line with your instructions where an engineering school is under construction. The rector of the engineering university that is, in fact, responsible for this block as a whole, reported to me on how he was implementing the programme. The centre was only established in 2018, and over these eighteen months has received some orders. They are few, but 100 million rubles is still a lot for a university engineering centre, and there are 83 of them. Young people, graduate students and also teachers work there and get orders from the market.

And, of course, the Industrial Development Fund has become a key support mechanism for import substitution and other projects.

Vladimir Putin: It is operating effectively.

Denis Manturov: Thank you.

Some 825 projects have already received 187 billion rubles, and over 300 of them have already launched serial production, mostly import substitution.

As planned, we are reaching a work model with the return of previously invested budgetary funds: borrowers have already returned 62 billion, and we expect to completely switch to the revolving funds scheme from next year, when the money transferred to us will be reinvested in these projects. According to our calculations, in 2023, we are to return 145 billion rubles through resident projects and taxes: this is exactly the money that we received in the capital of the fund.

Mr President, we are renewing the import substitution programme and want to switch to a new format. Previously, we had the main focus on producing and substituting final products. Now we are shifting the focus, taking into account the outcome of the pandemic and the increasing geopolitical tension on us. We will focus on developing our own raw materials and components.

At the same time, we want to offer grant support via the Industrial Development Fund among other mechanisms. This tool was designed for components for the car industry. The mechanism works like this: the borrower receives a concessional loan, and upon reaching the target indicators, we will partially write off this loan.

I think it will be a good motivation and will make it possible to achieve the goal you have set for Russia to achieve technological independence.

Vladimir Putin: Thank you.

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