The list of selected projects already includes pharmaceutical, mechanical engineering, and scientific projects / Smartmoney

The Industrial Development Fund (IDF) has received applications for more than 1,280 projects worth 450 billion rubles, Minister of Industry Denis Manturov said at a meeting of the State Council Presidium (quote from the Ministry of Industry website).

The 20 billion ruble fund was created in 2014 to support import-substituting industries (at 5% per annum for up to seven years); the funds should be selected by the end of the year. 56 projects worth 19.2 billion rubles have already been approved, a representative of the fund told Vedomosti. The remaining funds will be distributed on Wednesday at a meeting of the FRP expert council. The fund has slightly less than 1 billion rubles left and about eight applications for a much larger amount, some of which will have to be rejected, said Anton Danilov-Danilyan, chairman of the fund’s expert council. Manturov approached Prime Minister Dmitry Medvedev with a request to recapitalize the fund by 20 billion rubles in 2016 in October. The issue is still being worked out, says a ministry official.

Everyone to support

Another element of import substitution, Putin said, is the mechanism of a special investment contract. The investor must invest at least 750 million rubles in industrial production (new or modernization by 25%). In return, the state guarantees that it will not change the tax burden, and can also provide tax, rent, and duty benefits. Amendments are also being considered, according to which such a manufacturer can become the sole supplier for state orders.

The fund has gained good momentum, but it is necessary to closely monitor the effectiveness of these investments, President Vladimir Putin warned at the State Council (quoted by Interfax): so that the products produced are fully competitive in both quality and price.

The industry's current pain point is the lack of access to long-term money to launch new production, the official says: unprecedentedly favorable loan terms are good anti-crisis support. The list of selected projects already includes pharmaceutical, mechanical engineering, and scientific projects. The Ministry of Industry and Trade expects that their implementation will allow them to displace foreign analogues and export products.

Currently, the share of expenses on imported components in the costs of the Russian manufacturing industry is 10%, devaluation gives an advantage and even covers the growth of interest rates on loans, says Valery Mironov, an expert at the HSE Development Center: success in foreign markets is the only criterion for production efficiency. At the same time, the fund's resources (20 billion rubles) are insufficient, he believes: the production of the Russian manufacturing industry in 2014 amounted to 9.5 trillion rubles.

The Ministry of Industry and Trade is displacing others