In the early 1990s, I was taking a training program at the bank where I worked at the time, and in the process of solving one of the business cases, I made a mistake that I often remember. It was typical. I proposed improving a business that was already bringing in good income in favor of a new, as it seemed to me at the time, more advanced model. A fairly classic mistake, which in the language of consultants is called “killing a cow that is still capable of giving milk.”

This analogy comes to mind when you observe how in public rhetoric the multifaceted topic of industrial policy begins to be reduced to the topic of import substitution in extreme, fast-food forms. In fact, it is proposed to destroy the established model of work - both in current operational activities and in the implementation of investment projects. Our industry is certainly capable of "giving milk" and giving it even more, but for more sustainable and rapid growth it needs imported "hay" in the form of foreign technologies, equipment and financing.

What might happen now and what consequences does this pose in the future?

First of all, as one of the largest industrial investors in Russia (around 400 billion rubles in 2009–2014), we support the government’s course on import substitution and have been doing this work for a long time, for example, with potential suppliers of machine-building equipment for our projects. Today, large businesses, including Sibur, are taking the lead in certain areas of import substitution. In particular, we are actively working in the area of catalysts for oil refining and petrochemistry, which can more actively replace foreign analogues.

But objectively, not all industrial products, primarily equipment, are subject to immediate import substitution without damaging industrial growth. Import substitution is a topic that needs to be approached from very unexpected angles. The transition to Russian analogues in the field of complex, high-tech types of industrial equipment and services is a process that requires at least two to five years, simply due to the time cycle of technological implementation. The forced introduction of requirements for equipment localization will not only fail to solve the problem, but will also jeopardize investment projects in the industry, including those whose final products are aimed at import substitution. An example of this is synthetic materials such as polyethylene and polypropylene, which, in turn, are necessary for growth in volumes and new solutions in leading sectors of the economy: housing and communal services, the automotive industry, etc. It is also necessary to remember that equipment for the same oil and gas and chemical industries must be manufactured with a high degree of reliability. It is used at hazardous production facilities, and the health and lives of hundreds of people depend on its uninterrupted operation. Here, nothing can be taken on faith or worked on “promises.”

Another aspect related to import substitution that should always be remembered is cost. At the layman's level, it seems to us that it is cheaper to produce in Russia than abroad. In fact, in many cases we are faced with a situation where this is simply impossible, since someone who has long been mass-producing the products we need has a well-established process with low cost. For someone who produces one unit of equipment per year and specifically to order, the cost turns out to be several times higher. That is, technically he can produce the product, but economically it turns out to be more expensive for the investor. Our joint task with the state is to change these proportions.

The state has become noticeably more active in industrial policy in the last five years. In my opinion, this is unfairly little talked about, particularly in the press, but in cooperation with business, the solution of basic problems has shifted in terms of simplifying technical regulations, forming development institutions, and strategic planning. We can clearly see this in the example of petrochemistry. The expansion of the petrochemical resource base was stimulated through a policy of reducing the volume of associated petroleum gas flaring. A plan for the development of petrochemistry until 2030 has been developed. A cluster approach to development according to modern international standards of industrial planning has been formed. The transition to active investment in the industry by new financial institutions, such as the Russian Direct Investment Fund, has been prepared. Quite systematic work has begun on the introduction of modern consumption standards, which is gradually creating entire new segments of demand for petrochemistry, such as insulation with polymeric materials.

This work must be continued. Import substitution as a general course and a truly good advertising slogan does not cancel the need for further solving the accumulated problems in terms of stimulating industrial development: building logistics and other infrastructure, obtaining long-term money, further simplifying technical regulations, forming domestic demand for modern energy-efficient products not in the form of wishes, but in the form of requirements and standards, moving from spreading resources "in a thin layer" to targeted and substantial support for those projects that have human, investment, and technological resources behind them. State support for exporters must work - it must be recognized that the export of products de facto and materially better than any declarations testifies to the competitiveness of Russian goods in the global market. The current situation actualizes all these points, they must become integral parts of a long-term import substitution strategy, be consolidated in the legislative and regulatory framework and institutions at various levels.

In practice, however, specific government initiatives do not always support the import substitution strategy. An example is the possible restriction of the turnover of PET containers, the production industry of which has grown in Russia in the last 10 years from zero to almost complete coverage of the domestic market. And this is a niche for at least three segments of petrochemistry - PET (bottle), polypropylene (cap), BOPP films (label).

Is Russian industry capable of import substitution? I believe that it is. In the long term, everything is in place for this – material resources, human resources, and the common desire of business and the state. But import substitution can become a truly powerful long-term factor of state policy only if real content is separated from short-term speculation.

The author is the general director of the company "Sibur"

Save the cow that gives milk