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President of Russia Vladimir Putin: Good afternoon, colleagues,

We are here to discuss issues concerning import replacement. This will be the main focus of our attention today, of course.

But let me first make use of this opportunity, since we have the Government’s senior members here, including the deputy prime minister responsible for the energy sector, to say a couple of words about the need to ensure uninterrupted operation of the temporary generators in Crimea while the energy blockade of the region continues.

I am in constant contact with the Government, and I spoke today with the region’s heads. I want to thank the residents of Crimea for their endurance and their readiness to cope with the hardships brought about by this energy blockade. We will resolve these problems, of course.

We are surprised though by the position our partners in Kiev have taken. These things could not have happened without their tacit agreement. This is clear. They speak of the need to return Crimea to Ukraine, but in inflicting these mockeries on people, they are working in completely the opposite direction. Well, what can we do? This is their choice and there is nothing new or surprising here.

We need to do everything we can today to get the temporary generators working. As we agreed, by December 20, we will have the first section of the energy bridge in place, and the second section will be in place by the summer of 2016. I hope that this will go according to plan. The Energy Minister said that this work could be completed perhaps even sooner. I ask you only to make sure that the quality does not suffer. Mr Dvorkovich [Deputy Prime Minister], I draw this to your attention and ask you to keep this under your personal control.

As I said, we are here to discuss matters concerning modernisation of our economy.

We drafted a so-called import replacement programme in the aim of developing our technological and industrial base on a nationwide scale. The idea is to develop import replacement primarily in civilian industrial sectors and open modern new production facilities, using advanced technology, here in Russia.

Let me stress that the task is not to replace imported goods with Russian-made goods by any means possible. We need to organise mass production of high quality Russian-made goods that come at an acceptable and economically justified cost and can compete as equals with foreign equivalents on the market here and abroad.

In this respect, our engine makers’ achievements make me very happy. I want to congratulate Alexander Inozemtsev. Mr Inozemtsev, I congratulate you, as chief designer, and all of your colleagues, the whole team, on what is certainly a victory. We have not had an event like today’s in the nearly 30 years (29 to be exact) of our engine-building sector.

I want to thank the residents of Crimea for their endurance and their readiness to cope with the hardships brought about by this energy blockade.

This event, which took place just recently and passed largely unnoticed, was the development of our new PD-14 engine. This engine was planned originally for our new MS-21 plane, but in reality, it has been designed for our entire range of aircraft models, and will also have applications at gas pumping stations and other facilities that need such machinery. This is a big event for Russia’s industry, and for our aircraft manufacturing and engine-building sectors. I congratulate you.

Managing Director and Chief Designer of Aviadvigatel Alexander Inozemtsev: Thank you for your support and for your praise.

Vladimir Putin: Good luck.

Today, we will discuss precisely this kind of production and look at concrete projects related to import replacement.

Of course, carrying out these projects depends a lot on how well we plan and coordinate the work of the federal and regional authorities and the business community in this area. It is crucial to follow a common policy in this area and coordinate the import replacement projects with our country’s needs and demand, our priority economic development tasks, and our regions’ strong points.

The Industry and Trade Ministry has approved 20 sectorial import replacement plans that cover more than 2,000 products and technologies. We need to launch effective mechanisms for carrying out these plans and provide business initiatives with the necessary infrastructure and financial support.

Of course, we also need to ensure the human resources for these projects, and in this respect, I ask the regional heads to pay particular attention to professional education.

I note that this year, the Industry Development Fund has begun active work. It accords preferential loans for modernising industrial facilities and opening new high-tech production facilities. It has already approved 56 projects for a total 19.2 billion rubles. Private organisations are investing around 140 billion rubles in addition in these projects.

I remind you that the Fund provides targeted loans of 50–700 million rubles under a co-financing system at 5-percent interest for a 7-year period.

The Fund is working at a good pace now. We need to carefully monitor the effectiveness of this investment and make sure that the goods produced are fully competitive in terms of both quality and price.

Special investment contracts are another mechanism that should become a part of the import replacement effort. These contracts offer a range of preferences and incentives for modernising or opening new industrial facilities, for a period of up to 10 years. The Government has already approved the rules for concluding these contracts.

Regions and municipalities, with the federal authorities’ participation, will be able to sign these contracts with investors starting in 2016. I ask the regions to make active use of this instrument and work closely with potential investors.

The task is not to replace imported goods with Russian-made goods by any means possible. We need to organise mass production of high quality Russian-made goods.

Projects with greenfield status will also qualify for substantial tax breaks. These breaks will be extended to new industrial facilities starting from 2016. After these facilities begin production operations, they will qualify for profit tax deductions equivalent to the amount of investment made.

I want to draw my Government colleagues’ attention to the fact that this law does contain quite a few restrictions for potential investors, and I ask you to come back to this. There is still work to do. You need to take a close look at the decisions made and get rid of everything that could hamper this law’s active practical use.

Moving on, as I said, Russian-made goods must satisfy not just domestic demand; we need to promote them on markets abroad too. This requires a comprehensive system of support for non-commodities exports. This system should encompass the whole range of instruments, from preferential loans and insurance for exporters to loans for the final buyers of Russian products, following the practice many countries use in promoting their products abroad.

The Russian Export Centre started work in June 2015. It provides a single-window centre for financial and non-financial assistance for exporters. The centre’s portfolio already counts more than 70 projects in the automotive sector, aircraft manufacturing, agriculture, nanotechnology, and microelectronics. The volume is not big yet, but we need to take these first steps, see how this instrument works, and expand its possibilities.

We need to continue developing our industry’s and companies’ export potential. It is important for this support system to be in demand among our exporters and those who buy their products. Only then it will become a key mechanism for stimulating import replacement.

Let’s start work.

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