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Russian companies race to develop domestic alternatives to foreign tech

The Kremlin has allocated more than $256 mil to making the country’s industry and military immune to sanctions

(bne IntelliNews) – The west has imposed sanctions on Russia following the annexation of Crimea in 2014 and amongst the most painful has been the ban on selling technology to Russian companies, especially to the military as well as the oil and gas sector. The Kremlin has responded by telling Russian companies to develop their own “made in Russia” technological solutions.

Despite the collapse of the Soviet Union and the shoddy state of the Russian economy today, Russia remains a world power when it comes to tech. This is the country that put the first man into space, while still under a totalitarian regime and Russian military tech remains world class even today. At the same time thanks to the traditional emphasis on the “hard sciences” in Russian higher education, Russians remains in the vanguard of software development.

Several tech companies are rising to the challenge. Based in the Russian cities of Saratov, Penza, Perm, Saint Petersburg and Moscow these companies have received more than RUB15bn ($256mn) from the state budget to develop Russian alternatives to western technologies.

Russian Ministry of Economic Development has concluded six public tenders “for the research and development of several projects within the framework of the Federal Target Program No.1”. The aim of the program is to realize the state economic and social policy when solving long-term tasks and large infrastructure projects, according to the Ministry’s website.

The six tenders were awarded to companies whose task is to replace thus far imported American and European technology by their Russian equivalents. This primarily concerns technology needed for the development of the Russian military-industrial complex. In total, 77 foreign technologies are on the list of foreign tech the Kremlin wants to replace with a homemade equivalent.

In particular, the Ministry is interested in the reproduction of ultra-high-frequency and pulse transistors of the kind made by the American companies Cree, Microsemi and Integra and the Japanese Sumitomo Electric and Fujitsu. The Russian companies were also tasked to reproduce optical cables, lasers, chip resistors and switches made by American companies such as Gooch&Housego or Schneider Electric.

Most of these contracts have been awarded to research institutes and private companies based in Moscow and Saint Petersburg. For example, the Saint Petersburg-based National Research Institute “Electron” received RUB265mn Rubles to develop a series of photodetector arrays for high-precision optoelectronic systems (used for night vision surveillance systems). The final product is supposed to resemble the technology developed by the American company Fairchild Imaging.

Although the details of each of the tenders has been made publicly available by the Ministry, the more detailed information concerning the individual contracts fall under the State Secrecy Law, and their discussion with third parties is possible only with the permission of the Ministry.

The plan is not only to use the technology domestically but also to export it to foreign markets. In December after his annual press conference, Vladimir Putin met with the representatives of the Russian military-industrial complex in the State Kremlin Palace. During the meeting, Putin said that the Russian government “invested in the military sector a lot of money – three trillion rubles.” but this money “should not only help maintain Russia’s defense capability, but also to enable Russian companies conquer both Russian and foreign markets with high-tech civilian products.”

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