Russian defense industry expected to produce 10 trln rubles of new civilian products by 2030
MOSCOW. Aug 21 (Interfax) - Russia's defense industry will produce about 10 trillion rubles worth of new civilian products in the period to 2030, the director of the Military-Industrial Complex Diversification Center of the VNII Centr research institute, Denis Zhurenkov said at a meeting of the interagency working group of the defense industry board for diversification and development of market mechanisms that was held at the Army-2023 forum.
"Defense industry companies now manufacture about 12,000 civilian and dual purpose end products, of which about 8,000 are intended for the corporate segment. They have now launched about 850 projects [to set up production of civilian products] under which overall cumulative output will total about 10 trillion rubles by 2030," Zhurenkov said.
Defense industry companies are increasing production of civilian products despite the growth of government defense contracts, he said. Civilian products accounted for 23.9% of the industry's output in 2022, 4 percentage points more than a year earlier, Zhurenkov said.
"Defense industry organizations managed to increase deliveries of civilian and dual purpose products for the needs of the special military operation last year, foremost in the area of medical equipment, body armor, optical devices, radio communications equipment and automotive equipment," he said.
"In 2023, we expect a [civilian product] share of about 27%, which is a good indicator for the pace of development of high-tech products with dual and civilian applications," Zhurenkov said.
Participants in the meeting said that further diversification of production in the defense industry will be facilitated by the expansion and development of dual purpose research and manufacturing clusters and "technology intermediaries" based at Russian universities. The former are supposed to ensure, foremost, cooperation and the formation of technology chains among defense companies, research and educational organizations and medium and small innovative companies when organizing production of high-tech civilian or dual purpose goods. The latter are supposed to handle the issue of transferring technology between defense companies and manufacturers of civilian products.
The CEO of the Public-Private Planning Institute, Yelena Antipina said 26 regional dual purpose research and manufacturing clusters have now been created in Russia, but this is insufficient and a network of such clusters needs to be built. This is expected to make it possible to organize an exchange of the latest information about scientific and technological advances made by the participants of such clusters and to coordinate their actions to solve specific manufacturing challenges.
Zhurenkov, meanwhile, said only about 80 defense companies participated in various cluster mechanisms last year, but now their number has grown to 200, while the number of clusters has increased to 50 from 30 a year earlier.
The executive director of ETP LLC, Alexander Geller said electronic trading platforms (ETP) could become an instrument for building cooperation chains and exchanging information about the technology/product capabilities of research and manufacturing clusters. "Electronic stores" and "storefronts" for the products of various suppliers could be created on their basis, he said. ETP LLC is the official ETP for purchases by divisions of state corporation Rostec.
Participants in the meeting noted that diversification of production in the defense industry could be slowed by a number of bottlenecks in the regulation of rights to intellectual property, the organization of research and conducting R&D, and the organization of purchases within the context of cluster projects.
The latter refers to the possibility of conducting so-called consortium purchase, meaning purchases within a cluster or purchases by the lead company of a project on behalf of its other participants. However, most participants of dual purpose clusters are companies and organizations whose purchases are regulated by the laws FZ-223 "On purchase of goods, work and services by certain types of legal entities" and FZ-44 "On the contract system." These laws do not allow for such purchases, experts said.
At the beginning of 2019, President Vladimir Putin ordered the government to support the diversification of production in the defense industry into manufacturing of civilian products with measures to get government customers and state companies to buy such products. Civilian products are supposed to grow to 30% of defense companies' output by 2025 and to 50% by 2030.