The Ministry of Industry and Trade has just unveiled draft measures to protect sectors such as metallurgy, heavy engineering and transportation.
The country is going to spend over 1 trillion rubles making its key industries more competitive. This will involve not only huge investments, but also the slashing of foreign imports.
According to the draft plan, around 60 percent of imports will be cut in the next 10 years. At the same time, the country will introduce protectionist import and export duties.
The measures are hoped to provide enough support for the modernization of the country’s major industries. The officials fear that without state involvement, the infrastructure and innovation of the domestic sector will not be able to reach the needed level of competitiveness.
Market analysts cite the example of Russia’s car industry, which was dominated by foreign competition. Once the country raised import duties, most foreign companies moved production to Russia.
Another government instrument for increasing competitiveness is a tax-stimulus package and subsidizing the modernization of production lines. Analysts say that it could take at least five years for Russian producers to bring production up to date.
Market specialists noted that the set of protectionist measures could hamper Russia’s plans to join the World Trade Organization. If the country enters the world body, officials will have to come up with a different recipe for success.