Moscow. September 4. INTERFAX - The Russian manufacturing industry has been showing high growth rates for the second year, despite the variability of external and internal challenges, when logistical difficulties are replaced by payment difficulties, and the need to look for new sales markets is imposed on the high cost of borrowed funds. Anton Alikhanov, Head of the Ministry of Industry and Trade of the Russian Federation, told Interfax in an interview at the Eastern Economic Forum (WEF) how Russian processing will develop in these conditions and whether it will be possible to maintain positive dynamics in various industries.
- You headed the Ministry of Industry and Trade at a time when a large number of geopolitical and economic difficulties were combined in processing with intensive growth in production and investment. At the same time, it was already obvious that it was impossible to maintain such high growth rates for a long time, and constraints such as sanctions, expensive loans and a shortage of labor were with us for a long time. In these circumstances, how do you see the manufacturing industry in the medium term? What will be the driver - the domestic or foreign market, private or public investments, the development of new high-tech industries or maximum import substitution in traditional industries?
- Indeed, despite the sanctions pressure and economic volatility, in recent years the manufacturing industry has become a particularly dynamic and ready-to-change sector of the economy. The pace gained in 2023, when the manufacturing industry was able to demonstrate growth of 8.6% year-on-year, and investments in fixed assets increased by 19.2% over the same period, has been maintained this year.
So, according to recent data for seven months of this year, the manufacturing industry repeated the indicator of 2023 (plus 8.6%), and capital investments for the first half of the year increased by another 24.7% compared to the same period of the previous year. At the same time, I would like to note that the driver of such growth is consistently high-tech industries - the automotive industry, radio electronics, and pharmaceuticals.
However, we understand that the momentum of post-recovery growth is not endless and was also driven by the need to quickly replace the niches of departed foreign companies. It is worth saying that Russian industrialists approached this task responsibly and managed to develop and create high-quality products of priority segments of the economy in demand on the domestic market in the shortest possible time. We expect that by the end of this year, through joint efforts, we will be able to demonstrate the growth of manufacturing industries at the level of 6-7%.
At the current stage, having launched a rhythmic investment cycle and uninterrupted production of products that are important for the functioning of the economy, we are starting to implement the strategic tasks set by the president, which should radically transform the appearance of the industry already on the horizon of 2030. To do this, we are forming four of our own national projects to achieve technological leadership (NPTL) - "Means of production and automation", "New Materials and Chemistry", "Industrial support for transport mobility" and the already implemented national project "Unmanned Aircraft Systems", as well as participating in the industrial support of the implementation of four more national projects to achieve technological leadership in such important areas as healthcare, energy, food security and space technology.
These projects will have a "pulling" effect both on the production of products planned within the framework of the NPTL, which are available to a wide range of consumers, and on raw materials, materials, components of high processing from related industries, often produced by small technology companies. Taking into account the powerful budget momentum, detailed elaboration of the investment plan and long-term sustainable demand, human and technological needs, as well as cooperative ties, this set of strategic directions will allow us to form a qualitatively new trajectory for the development of the manufacturing industry.
Such an approach will contribute to the fusion of strategic national and corporate interests, which will allow joint coordinated efforts to move towards achieving technological sovereignty. Of course, in such a system, government incentives play an important role, which encourages enterprises to take actions that contribute to the realization of strategic goals, whether it is the production of priority products or productivity improvement. And of course, the needs and demand of the domestic market are now the foundation and an indisputable priority, while not only the current ones, but also the foundations for the production of promising products.
At the same time, we need to maintain a balance in order to ensure the sustainable and harmonious development of industry - this applies both to attracting private investment and entering foreign markets. Of course, we do not seek to limit domestic companies to work only on the domestic market. The positions of our manufacturers in foreign markets are also one of the most important priorities for the development of the manufacturing industry, including in terms of cooperative foreign projects that strengthen economic ties with our strategic partners and exchange technological competencies.
- Shipbuilding is traditionally one of the key topics at the WEF. As far as we know, the Ministry of Industry and Trade is developing a set of measures for the development of the industry. When is the updated industry strategy planned to be presented? What will it focus on, what are the main parameters and vectors of development that are supposed to be included in the new concept? The need for customers to build ships at Russian shipyards until 2035 was previously estimated at almost 1 thousand ships, based on this, how many ships are expected to be built during this period?
- The Ministry of Industry and Trade is working in this direction as part of the instructions of the head of government Mikhail Mishustin. The strategy for the development of the shipbuilding industry has already been developed and sent for approval to the federal executive authorities. Next, we will have to finalize it taking into account all the positions. The completion of work on updating the strategy will determine the comprehensive direction of development of the entire civil shipbuilding industry.
According to the results of the last update in December 2023, the long-term civil vessel construction plan accumulates information on more than 1.7 thousand civil vessels until 2037, including data on ships already under construction, as well as on prospective needs. Thus, the need to upgrade and build a new fleet is growing.
The dynamics of civil ship construction in recent years shows that industry enterprises can provide construction rates ranging from 80 to 110 units per year. The industry has sufficient potential to cope with the current needs of customers, but the successful implementation of this task depends on solving a number of issues faced by enterprises of the shipbuilding industry in their production activities. I am referring to the influence of external and internal factors, providing the shipbuilding industry with production and technological equipment, updating fixed assets, reducing high production costs, staffing, especially in remote regions of Russia, as well as issues of financing the construction of ships.
- At what stage is the discussion of the USC strategy and investment program now? Have the sources and amount of financing of the corporation been determined, as shown by the financial audit of the group?
- Following the results of the strategic session of the government, the USC is fine-tuning its work. The adoption of the document is planned procedurally after the government approves the updated industry strategy, since there should be no contradictions in the industry and corporate document. At the same time, the key mission and values are discussed with the participation of the corporation's employees. This will help plan the development of corporate culture, taking into account feedback from employees.
As for the development of the investment program, USC implements it jointly with VTB Bank. It will include measures to upgrade existing and create new production facilities, taking into account the task of achieving strategic goals by 2035.
About 30 organizations that are part of the USC circuit have formed investment programs for the period up to 2035. Since May of this year, they have been considered by the USC Investment Committee. Based on the initial review of these projects, a preliminary draft of the consolidated investment program of the corporation for the period up to 2035 was formed.
The preliminary volume of capital investments for 2024-2035 is more than 1.5 trillion rubles. Following the completion of the investment programs of the companies and their reconsideration at the investment committee, the consolidated investment program will be clarified in terms of the list of projects, the volume of capital investments and the definition of prospective sources of financing.
- How is the settlement process of previously concluded unprofitable contracts by the corporation going? Are there any disruptions in the ship construction schedule, refusals or revision of shipbuilding contracts due to the change of course of the corporation?
- We have held a number of discussions at the departmental and government levels on all the issues that have arisen. The issues of unprofitability have a different nature, therefore, several solutions have been developed. The main thing that has been resolved at the moment is that work has resumed on almost all previously problematic orders. VTB has advanced its financial leverage.
- How do you see the automotive market in the Russian Federation now in general - does it need to strengthen measures to stimulate demand, or, as representatives of the ministry said in the first half of the year, is it better to focus on organizing production for now? Does the Ministry of Industry and Trade intend to propose an increase in financing of preferential leasing and preferential lending programs in the automotive industry as part of the autumn budget formation, taking into account the fact that this year the pledged funds were exhausted in the first months?
- According to the results of the past eight months of this year, sales of new cars in the domestic market show good dynamics - 52% more than in the same period last year, more than 1 million 173 thousand new cars of all segments were sold. At the same time, the growth in the passenger segment is even more significant, by 63%.
Let me remind you that the federal budget for the current year provided financing in the amount of 17.3 billion rubles for the program of preferential car loans and 9 billion rubles for the program of preferential leasing. Indeed, most of the funds were disbursed in the first half of the year, but now the preferential leasing program continues to work for highly automated vehicles, all categories of public transport, including passenger taxis, and all domestic electric vehicles. Preferential car loans are valid for buyers of electric vehicles and for families with children in the subjects of the Far Eastern Federal District.
To date, more than 52.7 thousand cars have been sold under the preferential car loan program - almost 2 times more than in the whole of 2023, and about 29.7 thousand cars under preferential leasing. This is already a considerable amount of market support.
So far, the current federal budget law provides for an increase in funding for both programs for 2025 and 2026. Next year, we expect to allocate more than 23 billion rubles to finance the program of preferential car loans, 11 billion rubles for the program of preferential leasing. We will continue to monitor the market situation, and in the event of a slowdown in demand, we will work on expanding these measures.
- Will the capacities of domestic car builders be sufficient to ensure the renewal of rolling stock fleets against the background of mass decommissioning in the coming years? Are there any plans to take any measures to increase output?
- According to the forecasts of the industry community, the production of freight rolling stock in 2024 will not be lower than in 2023 and will amount to about 72-75 thousand wagons. At the same time, the capacities of domestic car builders are sufficient to meet the needs of the domestic market. At the moment, the enterprises have been contracted for 2024, rhythmic production and deliveries to customers have been ensured, and contracts for the next year are being actively concluded.
However, in order to maintain these rates, customers need to make more active use of the mechanism for concluding long-term contracts with manufacturers. This will allow our enterprises to correctly allocate resources and make production plans. With a clear need in advance, car builders will be able to calculate investments in expanding and modernizing production, increasing output volumes, and developing a new nomenclature. For this purpose, state support measures can also be involved - subsidizing R&D, subsidizing reengineering costs, preferential loans from FRP, a cluster investment platform.
- The Ministry of Industry and Trade participates in the implementation of the national project "New Nuclear and Energy Technologies" and is responsible for providing fuel and energy industries with domestic equipment. In July, you confirmed the goal of achieving the share of Russian producers at the level of 90% within the framework of the national project, compared with the current 70%. Can you reveal other parameters of your part of the project - how many types of equipment need to be localized, how much investment will be required for this, from what sources and in what proportion is it planned to finance the development and implementation of domestic equipment for the fuel and energy sector?
- Our targets within the framework of the "New Energy Technologies" direction, which is part of the national project "New Nuclear and Energy Technologies" - reaching the share of domestic equipment in the fuel and energy sector at 90%, increasing the volume of production of domestic equipment in the fuel and energy sector to 2 trillion 719 billion rubles.
To achieve these goals, we are implementing a number of activities within the framework of five federal projects - "New equipment and technologies in solar and wind generation", "New technologies and production of lithium-ion and post-lithium energy storage systems", "New equipment and technologies for LNG", "New equipment and technologies in the electric power industry", "New equipment and technologies in the oil and gas industry". Their result will be the emergence of more than 300 new technologies, pieces of equipment, products and components.
Of course, this will require some investment. In the basic scenario, their size is 265 billion rubles, of which the share of the federal budget is 144 billion rubles, and non-budgetary sources are 121 billion rubles. Please note that this is the basic option, that is, the maximum one. Based on the results of prioritization of packages of measures, including the amount of available funding, this figure may be specified.
- Not so long ago, the Ministry of Industry and Trade announced the process of localization of 32 units of LNG equipment. What kind of equipment is this? How many more types of equipment will remain to be imported?
- The work aimed at replacing imported LNG equipment began back in 2019, when Gazprom PJSC and NOVATEK PJSC formed a list of 18 priority areas for the development of LNG equipment with appropriate technical specifications. In 2021, the socio-economic development initiative "Breakthrough to LNG Markets" and the federal project of the same name were approved, the key indicator of which is an increase in the share of Russian equipment in the implementation of LNG projects based on Russian LNG technology to 80% by 2030 compared to 2021.
In 2022, taking into account the imposed sectoral sanctions and in order to prevent the disruption of the implementation of promising LNG projects, the list was expanded based on the needs of Gazprom and NOVATEK in the development of production of additional types of LNG equipment.
State support for the creation of LNG equipment is carried out within the framework of the mechanism for compensating part of the costs of R&D. In 2020-2023, 32 projects were supported for a total amount of about 15 billion rubles. This year, another development has been supported.
In order to ensure the implementation of the LNG equipment under development, in 2023, within the framework of the Coordinating Council for the Development of Oil and Gas Equipment, an agreement of intent with NOVATEK was signed with the roadmap, which includes almost all the equipment under development, which, subject to timely creation and successful testing, will be implemented in the company's LNG projects.
Today, we already have experience in supplying import-substituting LNG equipment created with state support - this is an LNG shipment pump manufactured by Afrikantov OKBM JSC. NOVATEK also signed contracts for the supply of steam gas compressors and mixed refrigerant compressors manufactured by Kazancompressormash JSC, nitrogen expander compressor units and cryogenic spiral nitrogen heat exchangers manufactured by Cryogenmash JSC, spiral cryogenic heat exchangers manufactured by Atomenergomash JSC.
- Industry and construction are actively generating demand for ferrous metallurgy products in the country, at the same time, as you recently noted, due to a reduction in export flows, steel smelting in the Russian Federation decreased in the first half of the year. What are the current forecasts of the Ministry of Industry and Trade on demand for ferrous metals and production dynamics in 2024? Should we expect a recovery in exports and a return to positive dynamics in steelmaking?
- To support the export of metal products in the context of its reorientation to new markets, we decided to extend the zeroing of the so-called "exchange rate" export customs duties on wire rod and cast iron until the end of the year. This measure has already made it possible to increase the average monthly export of wire rod from June by 61%, its effect by the end of the year will allow additional production and export of up to 200 thousand tons of high-margin products.
Let me remind you that the main lag in steelmaking was due precisely to a decrease in exports of long products, so we hope that this measure will significantly compensate for the decrease. The domestic market continues to grow, with demand for long products growing by 5% in the first half of the year. We should also not forget about the high base of last year, with good indicators for steel smelting and production of finished metal products. I think that by the end of the year, production in the ferrous metallurgy will demonstrate at least its "doc-like" values. At the same time, we continue to implement a large-scale program to restore the metallurgical capacities of Donbass, where steel production has been growing by a third for the second year in a row.
- Starting next year, IT companies, developers and manufacturers of radio electronics will return to paying income tax, however, at a preferential rate. How will this transition affect the economy of companies in the industry, investments and development? Are companies ready for such changes? Are the measures to support the industry sufficient now?
- A bill is currently being discussed, according to which this benefit will be extended. It proposes to extend it for 3 years, the bill was developed by the Ministry of Finance. We are discussing specific parameters with colleagues in the government. According to the latest data from the Federal Tax Service, radio electronics organizations saved 71.4 billion rubles in 2023 due to tax and insurance benefits.
We also proposed to include in the revenue offset for electronic engineering enterprises the revenue from services for the development of equipment, chemicals, gases. Currently, revenue is counted only from sales of these products.
As for support measures in general, Russian electronics is actively developing, and today there are already a number of domestic solutions on the market. We help industry participants ensure technological sovereignty over the electronic component base and equipment and deepen localization.
Support measures are in place in the field of electronics production - and, moreover, throughout the entire product chain, starting from applied research and ending with the production of industrial samples of equipment. Currently, the state subsidizes up to 70% of the costs to manufacturers for subsidies and at the same time reserves the rights to products to their developers. In terms of duration, company support projects reach 7 years, covering the entire product lifecycle. An additional advantage is that the created equipment is entered into the Unified Register of Russian Radioelectronic Products, which gives companies preferences in public procurement. In this case, priority is always given to Russian suppliers.
As for the effect of the support measures, I will give you a figure: within the framework of the agreements under Resolution 109 alone, products worth more than 60 billion rubles have already been sold. This is a very serious result.
Subsidies also apply to means of production (materials, special technological equipment and computer-aided design systems) and electronic components and modules, within which the state can compensate up to 90% of development costs.
- It would be possible to support the demand for Russian radioelectronic products by removing foreign analogues from the list of goods for parallel imports. The Ministry of Industry and Trade had previously come up with such an idea, but there were objections from consumers of these products. Is the discussion still ongoing? Can we expect an update of the list in terms of electronics before the end of the year?
- We always speak here with a single position: if there are solutions that can replace foreign analogues at a sufficiently high-quality level for the consumer, then we can talk about excluding one or another product from the list. In part, the list of electronics will be adjusted in the current package of changes. As for other decisions and initiatives of associations, in particular, the Computing Machinery Consortium, on the exclusion of HP and Fujitsu products, we expect our colleagues to agree on this issue, taking into account the production capacities of Russian manufacturers. I repeat, products can be excluded only if there are domestic solutions.
