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Russia’s import substitution policy to take years to bring noticeable results

August 18, 2015, 16:30 UTC+3 Alexandrova Lyudmila
Russia's PM inspects domestic agricultural products

Russia's PM inspects domestic agricultural products

© Alexander Astafyev/Russian government press service

MOSCOW, August 18. /TASS/. Russia’s import substitution policy announced a year and a half ago needs time to bring noticeable results, Russian experts say, commenting on a report by the Moody’s rating agency.

The policy of import substitution announced by Russia is not yielding results in any sector, except food production, Moody’s said in its latest Global Macro Outlook. In their previous report released three months ago, Moody’s analysts called import substitution in Russia a road to a rebound.

The Russian authorities announced a course towards import substitution in the first half of 2014 amid Western sanctions, which exposed the dependence of a whole number of important sectors on imports.

Renaissance Capital Chief Economist for Russia and the CIS Countries Oleg Kuzmin was quoted by RBC business daily as saying that he didn’t share the conclusions made by Moody’s analysts.

According to Kuzmin, import substitution has already started to bring its results and a more considerable effect will be seen in coming years.

"Time is needed for the process to go ahead," the expert said.

His opinion was shared by Chief Expert of the Center for Economic Forecasting at Gazprombank Yegor Susin.

"It would be wrong to expect that import substitution will become possible in sectors other than agribusiness within such short time limits," he said.

"Moody’s is right: the signs of import substitution manifest themselves concretely and in an accentuated form only in the food industry," Director of the Center for Market Studies at the Higher School of Economics Georgy Ostapkovich told TASS.

"This process is still purely fragmentary in other kinds of economic activity. This cannot be called comprehensive import substitution," he said. "Import substitution by itself takes years, if we consider hi-tech sectors. And, of course, this is a very expensive pleasure," he added.

"Import substitution should proceed in competition with imported goods. If we remove imports from the market and our enterprises make products without competition, we may get into a worse situation. In this case, there will be no competition and they will make products of the quality differing from the quality that would be available, if they operated in a competitive market," Ostapkovich said.

"A comprehensive program should be available. The Industry and Trade Ministry actually has such a program. That is, the process has been launched but it is early to say how much it will be successful. However, in principle, the entire process could have been implemented more actively over the year and a half," the expert said.

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